SINGAPORE, Sept 13 Reuters The dollar softened on Friday, with the yen hitting its highest level this year as investors remained on tenterhooks ahead of next week39;s central bank bonanza where the focus is on the Federal Reserve and the size of its expected interest rate cut.

While the Fed is all but certain to cut rates next week, uncertainty around whether it will go with a 25 basis point cut or 50 basis points bps has kept investors on edge and weighed on the dollar.

Analysts pointed to media reports from the Financial Times and the Wall Street Journal that said the Fed39;s decision would be a close call as one of the reasons for traders adding to wagers of a big rate cut next week.

Higher U.S. jobless claims data released on Thursday and the Wall Street Journal article on the Fed39;s rate cut dilemma revived bets on a jumbo cut at the September meeting, according to Christopher Wong, currency strategist at OCBC.

Traders are currently pricing in a 45 chance of the Fed cutting rates by 50 bps, CME FedWatch tool showed, having steadily risen over the past two days. Markets are pricing in 116 bps of easing from three remaining meetings this year.

Former New York Federal Reserve President Bill Dudley said on Friday there was a strong case for a 50 bps cut.

He said rates were currently 150200 basis points above the socalled neutral rate for the U.S. economy, where policy is neither restrictive nor accommodative. So the question is 39;Why don39;t you just get…