The Japanese Yen (JPY) weakened against its US counterpart on Friday and halted the previous day's recovery from its lowest level since early August. Japanese Prime Minister Shigeru Ishiba's blunt comments on monetary policy, coupled with the first decline in Japanese real wages in three months, a decline in household spending, and signs that price pressures from raw material costs are easing, raised doubts about the Bank of Japan's (BOJ) interest rate hike plans. This, in turn, undermined the JPY and helped the USD/JPY pair attract some buyers who were buying amid a modest US Dollar (USD) uptick.

Despite the growing belief that the Federal Reserve (Fed) will continue to cut interest rates amid signs of a weakening labor market, traders have fully priced in the possibility of more aggressive policy easing. This helped limit the USD's pullback from near two-month tops touched on Thursday and offered some support to the USD/JPY pair. However, a softer risk tone limited losses for the safe-haven JPY and may cap the pair ahead of the US Producer Price Index (PPI) due later on Friday. Nonetheless, the fundamental backdrop suggests that the path of least resistance for spot prices is to the upside.

Source: FXstreet