The yen followed on from its gains on Wednesday by adding to them here today. USD/JPY is under 148.50 as I post and yen crosses are lower pretty much across the board.

USD/JPY dropped under 149.00 after wages data in Japan for January. The data showed good nominal wage gains, adding to the best wage rises in 2 decades. But, as for inflation-adjusted wages, when you mix in CPI at its highest for 30 years real wages fell again in the data today, for the 22nd consecutive month. The more optimistic take is that the drop was the slowest in over a year. As an aside, this is partly why the Shunto wage talks are critical for the BOJ in considering their policy options – to tighten or not. As a reminder, the next BoJ meeting is on March 18 and 19.

Following the small dip lower for USD/JPY we had a string of yen-bullish items cross the wires:

  • There were reports that the Bank of Japan has approval from some government officials to end its negative interest rate policy in the near term
  • BOJ board member Nakagawa said the Japanese economy was making steady progress towards achieving the Bank's 2% inflation target, a sign of her conviction that conditions for phasing out its massive stimulus were clicking into place
  • Japan's largest industrial labour group said 25 of its member unions have so far had their wage demands met in full during annual wage talks that end next week. Full-time workers' pay is set to rise 6.7%.

As these items crossed USD/JPY fell further.

Still to come is Bank of Japan Governor Ueda speaking in parliament from 3.10 pm Tokyo time (0610 GMT, 0110 US Eastern time).

From China today we had January-February trade figures. China combined import and export data for January and February into one ‘YTD’ release to smooth out the impact of the Lunar New Year holidays, which fall in either January or February every year. Both imports and exports improved y/y. Chinese equities rose, as did ‘China proxy’ FX like AUD.

Federal Reserve Bank of Minneapolis President Neel Kashkari, in an interview with the Wall Street Journal, said he may change his forecast at the upcoming March 19 and 20 Federal Open Market Committee (FOMC) meeting from his December projection of two cuts in 2024 to only one. He says he has not yet decided.

AUD/JPY not as soft as other yen crosses with AUD catching a small bid from the Chinese data:

audjpy 07 March 2024 wrap chart 2