The Japanese yen rose in Asian markets on Wednesday against a basket of major and minor currencies, resuming gains that had briefly paused against the US dollar and moving toward a two-week high, after data showed an increase in wages in Japan a development that places further pressure on policymakers at the Bank of Japan.

The US dollar remains under negative pressure amid concerns about stability at the Federal Reserve, as President Donald Trump prepares to fill a vacant seat on the Fed Board of Governors by the end of the week.

The price

USD/JPY exchange rate today: The dollar fell against the yen by around 0.2% to 147.37, down from the opening price of 147.61. The highest level recorded was 147.75.

At Tuesdays close, the yen had lost 0.35% against the dollar, marking its first loss in three days, due to correction and profit-taking after earlier reaching a two-week high at 146.62.

Japanese wages

Japans Ministry of Labor said on Wednesday that total monthly cash earnings and a separate set of full-time wage data rose by 2.5% year-on-year in December the fastest pace since February. Cash earnings also rose by 1.4% in May, upwardly revised from 1.0%. Forecasts had pointed to a 3.1% rise.

Wage growth in Japan may pave the way for further price increases and an acceleration in inflation over the coming period. Undoubtedly, mounting inflationary pressures on Bank of Japan policymakers enhance the likelihood of additional interest rate hikes before the end of the year.

Japanese interest rates

Following the wage data, market pricing for a 25-basis-point rate hike by the Bank of Japan at its September meeting rose from 50% to 55%.

Minutes from the June monetary policy meeting showed that some members of the BOJs board indicated the central bank would consider resuming interest rate hikes if trade tensions eased.

The BOJ confirmed after last weeks meeting that it would raise interest rates if economic and price conditions align with projections.

BOJ Governor Kazuo Ueda said that the recent trade deal between the US and Japan represents a significant positive step toward strengthening economic stability by reducing uncertainty that has long burdened future expectations.

To reprice these expectations, investors are awaiting further data on inflation, unemployment, and wage levels in Japan.

The US dollar

The US Dollar Index fell by 0.1% on Wednesday, resuming its losses after a two-day pause, and nearing a two-week low reflecting continued weakness in the US dollar against a basket of global currencies.

The probability of a US interest rate cut in September rose from 85% to 90% following data showing an unexpected slowdown in US services sector activity in July.

Markets are focusing on President Trumps nominations to the Federal Reserve following the resignation of Fed Governor Adriana Kugler last Friday, as well as his pick for the head of the Bureau of Labor Statistics.

Trump stated on Tuesday that he would soon announce decisions regarding Kuglers short-term replacement, including his choice for the next Fed Chair. Treasury Secretary Scott Bessent was ruled out as a candidate to succeed Jerome Powell, whose term ends in May 2026.

Trump said that Bessent does not want to be Fed Chair, but noted that four other candidates are in the running for the position.