The Japanese yen rose in the Asian market on Thursday against a basket of global currencies, moving into positive territory against the US dollar, supported by weakness in the greenback in foreign exchange markets as bets increased on a Federal Reserve rate cut in September.

To reprice the odds of a potential 25-basis-point rate hike by the Bank of Japan in September, investors await key Japanese economic data on Friday, which will provide stronger evidence on the path of monetary policy normalization for the remainder of the year.

Price Overview

The dollar fell against the yen by 0.2% to 147.08, from the opening level of 147.39, recording a high of 147.49.

The yen ended Wednesdays session down by less than 0.1% against the dollar, its second loss in three days, amid correction and profit-taking from near two-week highs.

US Dollar

The dollar index fell by about 0.15% on Thursday, extending losses for a third straight session, reflecting continued weakness of the greenback against a basket of major and minor currencies.

The decline came as the US 10-year Treasury yield dropped to a two-week low, with traders increasingly pricing in a Fed rate cut next month.

Federal Reserve member John Williams noted that the September meeting would be open to a rate cut decision. Williams said: The risks are more balancedwe just have to wait and see how the data evolves.

Traders currently price about an 87% probability of a 25-basis-point Fed cut next month, with cumulative easing of 56 basis points expected by year-end.

Japanese Interest Rates

Bank of Japan Governor Kazuo Ueda said at Jackson Hole that wage increases are extending beyond large companies and are likely to continue accelerating due to tightening labor market conditions.

These comments reinforced market expectations for the BOJ to resume rate hikes soon, after pausing following Januarys increase. Traders currently see October as the more likely meeting for the next hike.

Pricing of a 25-basis-point BOJ hike in September is currently steady around 45%.

To reprice those odds, investors are awaiting key Japanese economic data on Friday, including Tokyo core inflation, retail sales, and unemployment.