The Japanese yen fell against a basket of major and minor currencies in the Asian market on Wednesday, resuming losses that were temporarily halted against the US dollar on Tuesday and hitting a two-week low, as investors continued to favor the US currency as a safe haven amid uncertainty surrounding negotiations over the Strait of Hormuz and ahead of key US inflation data.

Growing calls from Bank of Japan policymakers for a firmer response to rising inflation risks have strengthened expectations for a Japanese interest-rate hike in September.

The Price

The Japanese yen today: The dollar rose around 0.15% against the yen to 159.46, the highest level since July 31, from today's opening level of 159.26, while recording a low of 159.20.

The yen ended Tuesday up less than 0.1% against the dollar after losing 0.4% on Monday in a negative start to the week.

US dollar

The US Dollar Index rose 0.1% on Wednesday, extending its gains for a third consecutive session and reflecting continued strength in the US currency against a basket of global currencies.

The dollar continues to benefit from uncertainty surrounding negotiations between the United States and Iran over the Strait of Hormuz, amid reports of persistent disagreements over how international shipping should be regulated and the security guarantees governing the vital waterway.

Key US inflation data for July are due later today and are expected to provide crucial clues about the likelihood of the Federal Reserve raising interest rates this year.

Global oil prices

Oil prices rose more than 1% on Wednesday, extending gains for a third consecutive session and approaching their highest levels in two weeks, amid uncertainty over a potential Strait of Hormuz agreement between the United States and Iran and renewed concerns about the security of energy supplies from the Middle East.

Hormuz developments

Pakistan has indicated progress toward a US-Iran agreement, even as both Washington and Tehran continue to demand compensation.

Iran has reiterated that the strait will remain closed unless the United States meets its conditions, signaling a tougher negotiating stance.

Pakistan's interior minister has arrived in Tehran for talks with senior Iranian officials over the Strait of Hormuz crisis.

Qatar's Foreign Ministry spokesperson said negotiations between Oman and Iran over the Strait of Hormuz have reached an advanced stage.

US forces opened fire on a Panama-flagged vessel that was attempting to breach the blockade imposed on Iranian ports.

Japanese interest rates

A summary of opinions from the Bank of Japan's July meeting, released Monday, showed that at least three of the nine board members believe the central bank can raise interest rates at a faster pace than it has so far.

Market pricing for a 25-basis-point Bank of Japan rate hike in September has risen from 80% to 85%.

Investors are awaiting further data on inflation, unemployment and wages in Japan to reassess those expectations.

Japanese yen outlook

We expect the yen to remain under pressure against the US dollar. If US inflation data come in below market expectations, however, the yen could begin recovering from its two-week low against the dollar.