The Japanese yen declined in the Asian market on Friday against a basket of major and secondary currencies, extending its losses for the second consecutive day against the US dollar and moving further away from its highest level in three months, amid continued correction and profit-taking operations, alongside renewed buying of the US currency as a safe haven due to renewed military tensions between the United States and Iran in the Strait of Hormuz.

Government data from Japan showed that nominal wage growth slowed more than expected in March, reducing inflationary pressures on policymakers at the Bank of Japan and lowering the probability of a Japanese interest rate hike in June.

Price Overview

Japanese yen exchange rate today: The dollar rose against the yen by about 0.1% to 156.99, from the opening level of 156.87, and recorded a low of 156.71.

The yen ended Thursdays trading down by 0.35% against the dollar due to correction and profit-taking operations after recording its highest level in three months at 155.03 in the previous session.

The US dollar

The dollar index rose on Friday by about 0.1%, extending gains for the second consecutive session and reflecting continued strength in the US currency against a basket of global currencies.

This rise comes amid renewed buying of the US dollar as the best alternative investment, following renewed hostilities between the United States and Iran in the Strait of Hormuz in a clear breach of the ceasefire agreement.

Renewed tensions in Hormuz

US Central Command (CENTCOM) announced that three naval destroyers came under attacks involving missiles, drones, and fast boats while crossing the strait, with US forces responding through self-defense strikes targeting missile and drone launch sites as well as military facilities in Bandar Abbas and Qeshm Island.

President Trump described the latest US strikes as merely a light slap, stressing that the ceasefire agreement remains in place and effective despite these skirmishes.

Tehran accused Washington of violating the truce and targeting two Iranian vessels and civilian areas, while announcing that its air defenses intercepted hostile targets over Tehran and coastal regions.

Chris Weston, head of research at Pepperstone, said: The path toward a lasting peace agreement is not easy at all. He added: Traders have been forced to reconsider the assumptions built during recent sessions regarding the course of the conflict and the normalization of shipping traffic through the Strait of Hormuz.

Japanese wages

Japans Labor Ministry said on Friday that total monthly cash earnings and a separate set of full-time wage figures rose by 2.7% year-on-year in March, below expectations of a 3.2% increase, after wages had risen by 3.4% in February.

There is no doubt that slower Japanese wage growth paves the way for further declines in prices and a slowdown in inflation during the coming period, easing inflationary pressures on policymakers at the Bank of Japan and reducing the likelihood of Japanese interest rate hikes this year.

Japanese interest rates

Following the above data, pricing for the probability of the Bank of Japan raising interest rates by a quarter percentage point at the June meeting declined from 65% to 55%.

In order to reprice those probabilities, investors are awaiting the release of more data on inflation, unemployment, and wage levels in Japan.