#yen Most Asian currencies moved lower in thin trading due to the holiday on Thursday, while the dollar marginally recovered from significant losses throughout April, and the Japanese yen weakened after the Bank of Japan maintained interest rates unchanged but lowered growth forecasts.

The Australian dollar strengthened after a stronger than expected trade balance for March, although analysts doubt that this trade performance will continue, especially in the face of high US tariffs.

Most major markets in Asia, including China, were closed for Labor Day holidays, resulting in thin regional trading volumes.

The dollar strengthened despite data showing an unexpected slowdown in the US economy in the first quarter, amid rising uncertainty about President Donald Trump's trade and economic agenda. Other data showed US inflation remained high.

The greenback remains near its lowest level in three years.

The Japanese yen weakened after the BOJ maintained interest rates and cut growth forecasts.

The Japanese yen USDJPY pair rose 0.5% after the BOJ maintained interest rates unchanged, as widely expected.

However, BOJ policymakers cut their forecasts for economic growth and inflation for the current year, citing increased economic uncertainty due to US trade tariffs. Policymakers now expect GDP growth of 0.4% to 0.6% for the fiscal year 2025, significantly lower than the previous forecast of 0.9% to 1.1%. They also lowered expectations for core consumer price index inflation, citing expectations of moderation in the Japanese economy.

BOJ comments were perceived as dovish by the market, increasing doubts about when the central bank plans to raise interest rates further. Bets on a rate hike in June or July are likely to decrease after Thursday's announcement.

This puts short-term pressure on the yen. However, the currency still maintained a strong trend throughout April, benefiting from increased safe haven demand.

The dollar strengthened amid weak GDP and persistently high inflation.

The dollar index and dollar index futures rose 0.2% and 0.4% respectively in Asian trading on Wednesday.

The strengthening of the greenback occurred as the PCE price index – which is the Federal Reserve's preferred inflation gauge – came in stronger than expected for the first quarter, although prices appeared to moderate in March.

But the reading was largely overshadowed by GDP data showing an unexpected decline in growth in the first quarter, as uncertainty over Trump's policies hit spending.

Trump's top trade officials said Wednesday that trade negotiations with China have yet to take place, signaling little short-term relief for the market from the intense trade war between the world's largest economies.

Asian currencies broadly weakened in thin trading due to holidays, although the Australian dollar was an exception. The AUDUSD pair rose 0.2% as data showed Australia’s trade balance grew far more than expected in March, although this was largely attributed to front-loading exports before the imposition of increased US trade tariffs.

The offshore Chinese yuan USDCNH pair rose 0.1%, while the Singapore dollar USDSGD pair increased by 0.2%.