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07/06/24
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JPY Flat Despite Household Spending Softening
On Friday, the Japanese yen was calm, and USD/JPY traded at about 155.50, down 0.06% for the day in the European session.
Economic activity in Japan has been sluggish and a key driver of economic growth, household spending, in April dropped by 1.2% m/m. This came after March’s gain of 1.2% and was much lower than the market consensus of 0.2%.
Household spending rose 0.5% on a yearly basis, up from -1.2% but lower than the market consensus of 0.6%.
Households in Japan have been trimming spending as economic conditions are gloomy and inflation remains high. On Monday, Japan’s GDP for Q1 will be released and the forecast is not good.
It is expected the economy will have contracted by 0.5% q/q in the first quarter after the fourth quarter of last year showed no growth. This would indicate that the economy is barely avoiding a recession.
It is expected the economy will have declined by 2% on an annualized basis after the fourth quarter’s gain of 0.4%.
The Bank of Japan will meet again on June 14 and a weak GDP report may complicate plans to tighten policy. The BoJ has indicated that it would continue on the path to normalization but if it doesn’t make any moves, the Japanese yen could drop.
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