The Japanese yen declined in Asian trading on Friday against a basket of major and minor currencies, extending its losses for a second consecutive session against the US dollar and moving close to a three-week low, while heading toward a second straight weekly loss as investors continued favoring the US dollar as the preferred alternative safe-haven investment ahead of further developments in US-Iran peace talks.

Data released today in Tokyo showed Japanese core inflation slowing to its lowest level in more than four years, easing inflationary pressures on policymakers at the Bank of Japan and reducing expectations for a Japanese interest rate hike in June.

Price Overview

Japanese yen exchange rate today: The dollar rose against the yen by around 0.15% to 159.13, from todays opening level at 158.93, while recording a session low at 158.87.

The yen ended Thursdays trading down by less than 0.1% against the dollar, hitting its weakest level in three weeks at 159.34 after the release of strong US economic data.

Weekly Trading

During this weeks trading, which officially concludes with todays settlement, the Japanese yen is currently down 0.25% against the US dollar, on track for a second consecutive weekly loss.

US Dollar

The US Dollar Index rose around 0.1% on Friday, maintaining gains for a second straight session near six-week highs, reflecting the continued positive performance of the US currency against a basket of global currencies.

In addition to support from the recent broad rise in long-term US Treasury yields, investors continue favoring the US dollar as a safe haven while closely monitoring developments in peace negotiations between the United States and Iran.

US-Iran Talks

Iranian news agencies: The final version of the US-Iran agreement has been reached through Pakistani mediation, with an official announcement expected within the next few hours.

US Secretary of State Marco Rubio said there are good signs regarding the possibility of reaching a peace agreement.

Reports: Irans uranium stockpile and control over the Strait of Hormuz remain among the main points of disagreement between Washington and Tehran.

Core Inflation

Data released today in Tokyo showed Japans core consumer price index rising 1.4% year-on-year in April, the slowest pace since March 2022, below market expectations for a 1.7% increase, after a 1.8% rise in March.

These figures clearly indicate easing inflationary pressures on policymakers at the Bank of Japan, reducing the likelihood of Japanese interest rate hikes during this year.

Japanese Interest Rates

Following the data above, pricing for the probability of the Bank of Japan raising interest rates by a quarter percentage point at its June meeting declined from 85% to 65%.

Investors now await additional data on inflation, unemployment, and wage growth in Japan to reassess those expectations.