USD/JPY posts modest losses to near 147.00 ahead of US Manufacturing PMI data

• USD/JPY softens to near 147.15 in Tuesday's early Asian session.
• Markets expect the Fed to deliver its first interest rate cut in nearly a year at the September 16-17 meeting.
• The BoJ rate hike expectations boost the JPY and create a headwind for the pair. 

The USD/JPY pair trades with mild losses near a four-week-old trading range support around 147.15 during the early Asian session on Tuesday. The US August ISM  Manufacturing Purchasing Managers Index (PMI) will take center stage later on Tuesday. 

Rising expectations that the US Federal Reserve (Fed) will lower borrowing costs in the September meeting weigh on the US Dollar (USD) against the Japanese Yen (JPY). Fed Chair Jerome Powell hinted in his Jackson Hole address earlier this month that the unusual balance in the labor market raises the risk of a sharp downturn in employment. Powell further stated that the US central bank is open to easing policy. Additionally, Fed Governor Christopher Waller stated his support for a September cut and the possibility of more to follow. 

The prospect that the Bank of Japan (BoJ) will hike interest rates soon provides some support to the JPY and creates a headwind for the pair. According to a Reuters poll in August, nearly two-thirds of economists expect another 25 basis point (bps) hike again later this year, up from just over half a month ago.

Traders will take more cues from the US job data later on Friday, as it might offer some hints about the US economy's health and interest rate outlook. The US economy is estimated to see 75K job additions in August, while the Unemployment Rate is projected to tick higher to 4.3% during the same report period. If the reports show a stronger-than-expected outcome, this could help limit the USD's losses in the near term.