The Japanese yen weakened in Asian trading on Friday against a basket of major and minor currencies, paring some of its gains from the previous day against the US dollar after the release of gloomy economic data showing an unexpected slowdown in household spending.

Despite todays decline, the yen remains on track to post a weekly gain, supported by buying from eight-month lows and renewed expectations that the Bank of Japan may raise interest rates in December.

Price Overview

USD/JPY rate today: The US dollar rose 0.2% to 153.31, up from the sessions opening at 153.06, after touching a low of 152.81.

The yen ended Thursdays session up 0.7% against the dollar, its second gain in the past three sessions, recovering from an eight-month low of 154.48.

In addition to bargain buying, the yen strengthened Thursday following upbeat wage data for September.

Weak Data

Fridays figures from Tokyo showed that Japanese household spending rose 1.8% year-on-year in September, missing market expectations for a 2.5% increase, after a 2.3% rise in August.

The slowdown in consumer spending could pave the way for weaker prices and a moderation in inflation over the coming period. Easing inflationary pressure on policymakers at the Bank of Japan reduces the likelihood of further rate hikes in the near term.

Weekly Performance

So far this week, the yen is up about 0.5% against the US dollar, on track to record its first weekly gain in three weeks.

Interest Rate Outlook

Although Bank of Japan Governor Kazuo Ueda sent his strongest signal yet last week about a possible rate hike in December, markets remain unconvinced by the central banks cautious approach.

Market pricing currently reflects roughly a 55% probability of a 25-basis-point rate hike at the December meeting.

Investors are awaiting additional data on inflation, unemployment, and wage growth in Japan to reassess these expectations.