The Japanese yen edged lower in Asian trading on Friday against a basket of global currencies, moving into negative territory versus the US dollar after weak data showed a slowdown in Tokyos core inflation for August, reducing the likelihood of a rate hike by the Bank of Japan next month.

Over the course of August, however, the yen remains on track to post a monthly gain, supported by rising expectations of at least two US rate cuts before the end of the year, alongside renewed concerns about the stability of the Federal Reserve.

Price Overview

USD/JPY rose by more than 0.1% to 147.11, from an opening level of 146.93, after hitting an intraday low of 146.76.

The yen had closed Thursday up 0.3% against the dollar, marking its second gain in the past three sessions, buoyed by lower US 10-year Treasury yields.

Tokyo Core Inflation

Data released Friday showed Tokyos core consumer price index rose 2.5% in August, the slowest pace since March, in line with market forecasts. This compares with a 2.9% increase in July.

The slowdown in prices reduces inflationary pressure on policymakers at the Bank of Japan, diminishing the chances of further interest rate hikes this year.

Japanese Interest Rates

Following the inflation data, market pricing for a 25-basis-point rate hike by the BOJ in September fell from 45% to below 40%.

BOJ board member Nakagawa warned of risks stemming from trade policy and said he is awaiting the upcoming Tankan survey for guidance on the path of monetary normalization.

Monthly Performance

As August trading nears its close, the yen is up about 2.4% against the US dollar, poised to record its first monthly gain in four months.

The advance has been driven by rising expectations of a Federal Reserve rate cut in September, particularly after cautious remarks from Fed Chair Jerome Powell at the Jackson Hole symposium.

Safe-haven demand has also supported the Japanese currency amid growing concerns over Fed independence, following President Donald Trumps unprecedented move to dismiss Governor Lisa Cook, a step widely seen as undermining confidence in the central bank and US assets.