The Japanese Yen (JPY) extended gains for a fourth straight session on Friday, hitting a fresh weekly high against the US Dollar (USD) during Asian trading. Despite a weaker-than-expected Q1 GDP print—showing a 0.2% contraction QoQ and a 0.7% annualized drop—JPY demand remained firm amid growing expectations of further rate hikes by the Bank of Japan (BoJ). The BoJ's recent Summary of Opinions and remarks from Deputy Governor Shinichi Uchida signaled a continued tightening bias, boosting sentiment. Progress in US-Japan trade talks, with top negotiator Ryosei Akazawa expected to visit Washington soon, further underpinned the currency. Meanwhile, soft US data—including a 0.5% drop in PPI and sluggish retail sales—reinforced expectations of Fed rate cuts, dragging US Treasury yields lower and weighing on the USD. Despite improving global risk appetite following US-China tariff de-escalation, the safe-haven JPY stayed strong, supported by a clear policy divergence between a hawkish BoJ and a dovish Fed.

Japan’s Nikkei 225 Index declined 0.4% to around 37,600 on Friday, while the broader Topix Index slipped 0.1% to 2,736, marking a third consecutive day of losses. Weaker-than-expected Q1 GDP data, showing a 0.2% contraction, dampened investor sentiment, highlighting Japan's first economic shrinkage in a year. The disappointing figures reinforced concerns raised by the Bank of Japan about potential economic moderation amid global trade uncertainties. Japanese equities also mirrored overnight losses in U.S. tech stocks, which faced profit-taking pressure. Domestic technology shares led the downturn, with Disco and Advantest losing 1.6% each, and Tokyo Electron falling 2.1%. Market heavyweights Sony Group and Toyota Motor also declined, shedding 2.3% and 1.7%, respectively, amid broader market caution.