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Turbulence in the Yen Following Strong US Nonfarm Payroll Data
The Japanese yen continues to struggle following a robust US nonfarm payroll report, exceeding market expectations. During the North American trading session, the USD/JPY exchange rate stands at 148.88, indicating a 0.33% surge.
The Yen's Rapid Tumble After Potent US Payroll Figures
The greenback concluded the week on a triumphant note, fuelled by a staggering 353 thousand nonfarm payrolls for January, which obliterated the projected 180 thousand. The December figure also underwent an upward adjustment to 333 thousand, initially reported as 216 thousand, further evidence of vigor in the American labor market.
Since the dawn of the new year, the Japanese yen appears weak, depreciating by 5.4%. Last Friday, the US dollar registered hefty appreciations against preeminent currencies, recording a 1.3% ascendancy over the Yen. This was its most striking single-day performance since the eve of All Saints' Day.
Anticipating Japan's Wage Growth and Household Expenditure Releases
Japan is slated to announce the wage growth and household consumption data this Tuesday, with both forecasted to have increased in December. Household expenditure is expected to record a 0.2% monthly increase, following a 1% contraction in November. Mean cash earnings are also expected to grow by 1.3% annually, a significant uptick from the 0.2% previously reported for November.
The Bank of Japan's Close Monitoring
The Bank of Japan is observing these developments closely. A credible household income and spending report could validate that the economy is on an upward trajectory and capable of reversing the negative interest rate policy. Governor Ueda, along with other senior officials of the bank, has inferred that the BoJ intends to gradually retreat from its extraordinarily accommodating monetary policy, which has been in place since 2016.
The Impact of Policy Changes on Yen
With indicators suggesting that wages and service prices are on an uptrend, a policy shift could be announced either in April or June. The upcoming national wage negotiations could result in wage boosts, causing the BoJ to rethink their policy toward tightening.
Technical Analysis of USD/JPY
The USD/JPY seemed to test its previously recorded support at 147.73. Subsequent support is found at 146.8, while resistance is expected at 149.22 and 150.08.
