The Japanese yen weakened against other major currencies in the Asian session on Friday, as Asian stock markets traded higher, following the dovish comments from the U.S. Fed, signaling a series of interest rate cuts next year, continued to aid sentiment.

The Fed left interest rates unchanged and hinted at three rate reductions in 2024, citing easing inflation and slowing economic growth.

In economic news, data from Jibun Bank showed that the manufacturing sector in Japan continued to contract in December, and at a faster pace, with a flash Performance of Manufacturing Index score of 47.7. That's down from 48.3 in November. The survey also showed that the services index improved to 52.0 in December from 50.8 in November.

On Thursday, the yen rose against its major rivals. In the Asian trading now, the yen fell to 2-day lows of 156.50 against the euro, 181.74 against the pound and 164.22 against the Swiss franc, from yesterday's closing quotes of 155.93, 181.11 and 163.48, respectively. If the yen extends its downtrend, it is likely to find support around 160.00 against the euro, 186.00 against the pound and 169.00 against the franc.

The yen edged down to 142.47 against the U.S. dollar, from Thursday's closing value of 141.87. On the downside, 149.00 is seen as the next support level for the yen.

Against the Australia and the New Zealand dollars, the yen slipped to 95.44 and 88.44 from yesterday's closing quotes of 95.01 and 88.03, respectively. The yen may test support near 96.00 against the aussie and 91.00 against the kiwi.

The yen dropped to a 2-day low of 106.23 against the Canadian dollar. At yesterday's close, the yen was trading at 105.81 against the loonie. The next possible downside target for the yen is seen around the 110.00 region.

Looking ahead, PMI reports from various European economies and U.K. for December and Eurozone foreign trade and labor cost reports for November are due to be released in the European session.

In the New York session, Canada housing starts for November, wholesale sales data for October, U.S. industrial and manufacturing production for November, U.S. S&P Global manufacturing PMI reports for December and U.S. Baker Hughes rig count data are slated for release.

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