The Japanese Yen (JPY) ticks higher against its American counterpart after government data showed this Thursday that base pay in Japan grew at the fastest pace in more than three decades. This comes on top of talks that large Japanese firms are likely to increase wages by about 5% on average in 2025, which, along with broadening inflationary pressure, backs the case for another interest rate hike by the Bank of Japan (BoJ). Apart from this, the cautious market mood underpins the safe-haven JPY and drags the USD/JPY pair away from a multi-month peak, around the 158.55 region touched on Wednesday.
Investors, however, remain skeptical about the likely timing of when the BoJ will hike interest rates again and expect the central bank to wait until this year's Shunto spring labor-management negotiations. Furthermore, the recent widening of the US-Japan rate differential, bolstered by the Federal Reserve's (Fed) hawkish signal that it would slow the pace of rate cuts in 2025, might contribute to capping the lower-yielding JPY. Traders might also opt to wait on the sidelines ahead of speeches by a slew of influential FOMC members later this Thursday and the US Nonfarm Payrolls (NFP) report on Friday.
From a technical perspective, any subsequent slide is likely to attract some dip-buying near the 157.55-157.50 horizontal zone. Some follow-through selling, however, could make the USD/JPY pair vulnerable to accelerate the fall further towards the 157.00 mark en route to the next relevant support near the 156.75 region and the weekly low, around the 156.25-156.20 area. This is followed by the 156.00 mark, which if broken decisively might shift the bias in favor of bearish traders.
On the flip side, the 158.55 region, or the multi-month top touched on Wednesday, now seems to act as an immediate hurdle. A sustained strength beyond could lift the USD/JPY pair to the 159.00 mark. The momentum could extend further towards the 159.45 intermediate hurdle before spot prices aim to reclaim the 160.00 psychological mark.
This indicator, released by the Ministry of Health, Labor and Welfare, shows the average income, before taxes, per regular employee. It includes overtime pay and bonuses but it doesn't take into account earnings from holding financial assets nor capital gains. Higher income puts upward pressures on consumption, and is inflationary for the Japanese economy. Generally, a higher-than-expected reading is bullish for the Japanese Yen (JPY), while a below-the-market consensus result is bearish.
Read more.Last release: Wed Jan 08, 2025 23:30
Frequency: Monthly
Actual: 3%
Consensus: 2.7%
Previous: 2.6%
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