The Japanese yen rose in Asian trading on Thursday against a basket of major and secondary currencies, extending its recovery for a second consecutive day against the US dollar amid continued buying from six-week lows, supported by recent comments from Japans finance minister.

Weak labor market data in Japan has reduced expectations for Japanese interest rate hikes in the near term, as investors await further evidence on the Bank of Japans monetary policy path this year.

Price Overview

Japanese yen exchange rate today: the dollar fell against the yen by 0.4% to 156.45, down from the opening level of 157.05, after touching a session high of 157.19.

The yen ended Wednesdays trading up by 0.4% against the dollar, marking its first gain in the past three days after hitting a six-week low of 157.97 in the previous session.

Japanese Finance Minister

Japanese Finance Minister Satsuki Katayama said on Tuesday that financial officials are monitoring markets closely with a strong sense of urgency. When asked about the possibility of currency market intervention, she said Japan reached a mutual understanding with the United States last year.

Japanese interest rates

Data released this week in Tokyo showed Japans unemployment rate rose to 2.7% in January, above market expectations of 2.6%, after recording 2.6% in December.

Following the data, market pricing for a 25-basis-point interest rate hike by the Bank of Japan in March fell from 15% to 5%.

Pricing for a 25-basis-point rate increase in April also dropped from 40% to 25%.

In the latest Reuters poll, the Bank of Japan is expected to raise interest rates to 1% by September.

Analysts at Morgan Stanley and MUFG wrote in a joint research note that they had already viewed the probability of a rate hike in March or April as low, but with rising uncertainty stemming from developments in the Middle East, the Bank of Japan is likely to adopt a more cautious stance, further reducing the chances of a near-term rate hike.

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