The Japanese yen rose in the Asian market on Friday against a basket of major and minor currencies, maintaining gains for the fourth consecutive day against the US dollar, near a four-week high, on the verge of a weekly gain, after Japanese wage data provided more room for the Bank of Japan to raise interest rates for the third time this year.
The Japanese currency is also supported by the current fall in the yield on ten-year US Treasury bonds, ahead of the release of monthly jobs data in the United States, which will provide strong clues about the pace at which the Federal Reserve will cut interest rates in September.
Price outlook • Japanese yen exchange rate today: The dollar fell against the yen by about 0.4% to (142.89 ¥), from the opening price of today’s trading at (143.44 ¥), and recorded the highest level at (143.48 ¥).
The Japanese yen rose 0.2% against the US dollar on Thursday, its third consecutive daily gain, and hit a four-week high of 142.84 yen, thanks to Japanese wage data and aggressive comments from a Bank of Japan official.
Weekly trading throughout this week’s trading, which officially ends when prices settle today, the Japanese yen is up so far by about 2.25% against the US dollar, in the process of achieving the second weekly gain within the last three weeks, due to renewed pressure on curry yen deals.
Japan’s Labor Ministry said on Thursday that total monthly cash income and a separate set of full-time wage figures rose 3.6 percent annually in July, higher than economists’ expectations for a 3.0 percent rise, and cash income recorded a 4.5 percent rise in June.
Japan’s real wages rose 0.4 percent year-on-year in July, rising for the second consecutive month after a 1.1 percent rise in June.
Japan’s current wage levels are undoubtedly increasing inflationary pressures on BoJ’s monetary policymakers, boosting the chances of further increases in Japanese interest rates this year.
Strong wage data gives the Bank of Japan more room to raise interest rates for the third time this year, increasing pressure on curry-yen deals and leading to further declines in Japanese stocks.
Bank of Japan board member Hajime Takata said the central bank should continue to raise interest rates if it can confirm that companies will continue to increase spending and wages.
Traders still see less opportunity to raise Japanese interest rates at the Bank of Japan meeting in October, with the odds of a third Japanese interest rate hike in December rising to 90%.
US Bond YieldThe yield on 10-year US Treasury bonds fell on Friday by 0.4 percentage points, deepening losses for the fourth consecutive session, hitting a four-week low of 3.716%, which reduces investment opportunities in the US dollar.
This development in the US bond market follows the release of a series of gloomy data on the US labor market, which strongly enhances the prospects that the Federal Reserve will cut interest rates at a significant pace this year.
According to CME Group’s FeedWatch: pricing the odds of a 50 basis point cut in US interest rates at the September meeting are currently stable at 43%, and the pricing of the odds of a cut by about 25 basis points at 57%.
In order to reprice those possibilities, investors await later in the day the release of the monthly US jobs report, which includes new jobs added in the non-farm sectors during August, the unemployment rate and the average hourly wage.
The shrinking gap on long-term bond yields between Japan and the United States makes Japan’s currency yields an investment target for short buyers and deal financing, which favors the appreciation of the Japanese yen.
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oughout this week’s trading, which officially ends when prices settle today, the Japanese yen is up so far by about 2.25% against the US dollar, in the process of achieving the second weekly gain within the last three weeks, due to renewed pressure on curry yen deals.
Japan’s Labor Ministry said on Thursday that total monthly cash income and a separate set of full-time wage figures rose 3.6 percent annually in July, higher than economists’ expectations for a 3.0 percent rise, and cash income recorded a 4.5 percent rise in June.
Japan’s real wages rose 0.4 percent year-on-year in July, rising for the second consecutive month after a 1.1 percent rise in June.
Japan’s current wage levels are undoubtedly increasing inflationary pressures on BoJ’s monetary policymakers, boosting the chances of further increases in Japanese interest rates this year.
Strong wage data gives the Bank of Japan more room to raise interest rates for the third time this year, increasing pressure on curry-yen deals and leading to further declines in Japanese stocks.
Bank of Japan board member Hajime Takata said the central bank should continue to raise interest rates if it can confirm that companies will continue to increase spending and wages.
Traders still see less opportunity to raise Japanese interest rates at the Bank of Japan meeting in October, with the odds of a third Japanese interest rate hike in December rising to 90%.
US Bond YieldThe yield on 10-year US Treasury bonds fell on Friday by 0.4 percentage points, deepening losses for the fourth consecutive session, hitting a four-week low of 3.716%, which reduces investment opportunities in the US dollar.
This development in the US bond market follows the release of a series of gloomy data on the US labor market, which strongly enhances the prospects that the Federal Reserve will cut interest rates at a significant pace this year.
According to CME Group’s Feed Watch: U.S. interest rate cut odds priced at around 50 basis points at a meeting
