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06/09/24
104
Yen Gains Strength as Labor Earnings Rise; Market Awaits US Jobs Data
The Japanese Yen has continued to strengthen, marking its fourth consecutive session of gains, driven by rising Labor Cash Earnings in Japan. This increase in real wages has fueled speculation about potential interest rate hikes from the Bank of Japan (BoJ) as early as next year. The USD/JPY currency pair has faced challenges, exacerbated by a weakening US Dollar influenced by recent dovish comments from Federal Reserve officials.
One key figure from the BoJ highlighted the possibility of adjusting policy rates in a gradual manner should economic and price conditions align with forecasts. He acknowledged a moderate recovery in Japan’s economy, despite noticing some weaknesses. The ongoing volatility in the stock and foreign exchange markets has not deterred the BoJ’s confidence in reaching its inflation goals.
Market participants are now closely observing the upcoming US Nonfarm Payrolls report, anticipated to show an increase of 160,000 jobs in August, up from July’s figures. This data could provide valuable insights into the magnitude of potential interest rate cuts by the Federal Reserve later in the month. A recent report showed private-sector employment rose less than expected in August, hinting at slower job growth.
In Japan, Labor Cash Earnings increased by 3.6% year-on-year in July, which although a decline from June’s performance, exceeded expectations. The economic sentiment among Fed officials suggests a shift towards more accommodating monetary policies, with some advocating for policy adjustments in light of decreasing inflation and slowing economic growth.
The latest data reveals a decrease in US job openings and a slight revision in Japan’s service sector PMI, signaling mixed economic signals. Technically speaking, the USD/JPY exchange rate is approaching a seven-month low, with indicators suggesting continued bearish momentum. On the support front, key levels are set at 141.69 and 140.25, while resistance points are indicated at 144.60 and 146.02, hinting at cautious market sentiment for the near future.
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