The Japanese yen fell in Asian trading on Friday against a basket of major and secondary currencies, extending losses for a second consecutive session against the US dollar and heading toward a third straight weekly decline, as investors continue to favor the US currency as a safe-haven alternative amid the fallout from the Iran war.

The Japanese currency slipped to its lowest level in six weeks, prompting Japans finance minister to warn against excessive moves in the foreign exchange market, stressing that authorities could intervene to support the local currency if necessary.

Weak labor market data in Japan also reduced expectations for a near-term interest rate hike, as investors await further evidence regarding the Bank of Japans monetary policy path this year.

Price Overview

Japanese yen exchange rate today: the dollar rose against the yen by 0.15% to 157.75, up from the opening level of 157.55, after touching a session low of 157.38.

The yen ended Thursdays trading down 0.3% against the dollar, resuming losses that had paused the previous day during a brief recovery from a six-week low of 157.97.

Weekly performance

Over the course of this weeks trading, which officially concludes at todays settlement, the Japanese yen is down about 1.15% against the US dollar, on track for a third consecutive weekly loss.

US Dollar

The dollar index rose more than 0.1% on Friday, maintaining gains for a second consecutive session and trading near its highest level in a month and a half, reflecting the strength of the US currency against a basket of global currencies.

The rise comes as investors buy the dollar as a preferred safe-haven asset, with the Iran war entering its seventh day and fears growing of a wider conflict in the Middle East. These concerns have driven energy prices sharply higher and increased downside risks for the global economy.

Strong economic data from the United States and renewed speculation about inflationary pressures on the Federal Reserve have also reduced expectations for US interest rate cuts during the first half of this year.

Investors are now awaiting the US February jobs report later today, which the Federal Reserve closely monitors in determining the path of monetary policy.

Japanese finance minister

Japanese Finance Minister Satsuki Katayama said this week 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 this data, market pricing for a 25-basis-point 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 waiting for additional data on inflation, unemployment, and wages in Japan to reassess these expectations.