The dollar dropped on Friday to its lowest against the yen in more than a week after the Bank of Japan left policy unchanged and data showed the U.S. economy expanded more slowly than expected in the first quarter.
The dollar was on pace to notch its largest daily percentage loss against the yen since April 15 as a confluence of factors, both technical and fundamental, came into play.
The BOJ held off from announcing new monetary initiatives on Friday, while policymakers were divided over whether the central bank can meet its target for 2 percent inflation in two years.
"Dollar/yen continues to react to what happened overnight, and while the BOJ did not surprise, two of the board members said it would be hard to reach the 2 percent inflation target, and that put (upward) pressure on the yen," said Charles St-Arnaud, forex strategist at Nomura Securities in New York.
"Then, we had the weak GDP data, signaling underperformance in the U.S. and that led to short covering," he said.
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U.S. gross domestic product expanded at a 2.5 percent annual rate, the Commerce Department said on Friday, after growth nearly stalled at 0.4 percent in the fourth quarter. The increase, however, missed economists' expectations for a 3.0 percent pace.
U.S. government bond yields, which move inversely to price, fell after the GDP data as it stoked bets the Federal Reserve might consider more stimulus at its policy meeting next week.