The Japanese yen recovered to a certain extent after a decline during the two previous sessions.
Market sentiment remains focused on trade risks following remarks by U.S. Treasury Secretary Scott Bessent, who downplayed the likelihood of a near-term resolution in U.S.-China trade negotiations, fuelling safe-haven demand for the yen.
Hopes of a quick U.S.-Japan deal could also support the currency. Furthermore, expectations that the Bank of Japan (BoJ) may pursue further interest rate hikes in 2025 could provide some support for the yen.
Economic indicators in Japan continue to present mixed indications, fuelling some caution. The manufacturing sector contracted in April, with the Jibun Bank flash manufacturing PMI inching up slightly to 48.5 from 48.4 in March yet remaining below the 50.0 threshold. In contrast, the service sector showed a recovery, with the flash services PMI rising to 52.2 from 50.0.
