The Japanese yen rose in Asian trading on Thursday against a basket of major and minor currencies, attempting to recover from a three-week low against the U.S. dollar. The move came on the back of bargain buying from lower levels, supported by a pause in the dollars rally ahead of key U.S. data releases.

Expectations for a Bank of Japan rate hike in October declined after less aggressive comments from Governor Kazuo Ueda, as markets await further evidence on the path of monetary policy normalization in the worlds fourth-largest economy.

Price Overview

USD/JPY today: the dollar fell by 0.15% to 148.56, down from the opening level of 148.89, after touching a high of 148.90.

The yen ended Wednesday down 0.85% against the dollar, snapping a three-day winning streak, and hitting a three-week low at 148.92 amid political uncertainty in Japan.

U.S. Dollar

The U.S. dollar index slipped 0.1% on Thursday, retreating from a two-week high of 97.92, reflecting a pause in the greenbacks rally against global currencies.

Beyond profit-taking and corrective moves, the dollar is easing ahead of key U.S. data on Q2 economic growth and weekly jobless claims. These figures are expected to provide clearer signals on whether the Federal Reserve will continue cutting rates through the remainder of the year, particularly after the cautious remarks from Fed officials regarding the policy outlook.

Japanese Interest Rates

Governor Kazuo Ueda said Friday that policymakers must closely monitor the impact of trade policies on financial markets, foreign exchange, the economy, and prices in Japan.

He added that the Bank of Japan will continue raising rates if the economy and inflation evolve in line with expectations, supported by improving conditions.

Following Uedas comments, market pricing for a 25-basis-point rate hike in October dropped from 75% to below 50%.

Investors now await further data on inflation, unemployment, and wages in Japan to reassess those odds.