SINGAPORE, Sept 16 Reuters The yen hit its highest levels in more than a year on Monday in trading thinned by a holiday in Japan, as market participants increasingly expected an oversized rate cut by the Federal Reserve later this week.

Trading in Asia was slow, with markets in Japan, China and South Korea closed for holidays.

The dollar was down 0.47 at 140.15 yen , falling further from the 140.285 endDecember low it struck on Friday to levels last seen in July 2023. It fell 1.3 on the yen last week.

The Fed39;s Sept. 1718 meeting is the highlight of a busy week that also has the Bank of England and Bank of Japan announcing policy decisions on Thursday and Friday.

Treasury yields have been falling in the runup to the highly anticipated meeting, particularly as odds stack up for the Fed to get aggressive with a halfpoint rate cut.

Benchmark 10year yields are down 30 basis points in about two weeks. Cash Treasuries were not traded in Asia due to the Japan holiday. Twoyear yields , more closely linked to monetary policy expectations were around 3.57 and down from roughly 3.94 two weeks ago.

Selling the dollar for yen has been the cleanest trade for investors looking to play the drop in Treasury yields, said Chris Weston, head of research at Australian online broker Pepperstone.

While speculators are short and riding this lower, this trend is clearly one to align with, and the December lows for the dollaryen pair is one to watch, he said.

Fed speakers and data…