- Japanese Yen (JPY) falls after weaker wage growth & household spending
- Wages fell -0.6% & household spending dropped 1.9%
- US Dollar (USD) rises as the trade deficit narrows
- US exports reach a record high
The US Dollar Japanese Yen (USD/JPY) exchange rate is rising after yesterday’s losses. The pair fell 0.36% in the previous session, settling at 1481.18. At 16:00, USD/JPY trades +0.05% at 148.23 and is in a range of 147.34 to 148.32.
The Japanese yen is falling lower after data showed that Japan’s inflation-adjusted wages fell in August while household spending also declined.
Real wages in the world’s fourth largest economy fell 0.6% in August compared to the same month a year earlier, following a 0.3% increase in July.
Other data showed household spending fell 1.9% year on year, potentially raising doubts over the strength of consumption, which accounts for more than 50% of Japan’s economy. However, the fall was smaller than the market’s expectations of a 2.6% drop.
Still, today’s data raises questions over how much head room the BoJ has to hike rates.
The US Dollar is rising across the board. The US Dollar Index, which measures the greenback against a basket of major currencies, trades at 102.57 at the time of writing, up 0.05%, marking the seventh straight day of gains.
The US dollar is heading higher after data showed that the US trade deficit contracted sharply in August, dropping to a 5-month low.
According to data from the Commerce Department, the US trade deficit is now $70.6 billion, down from a previously reported $78.8 billion in July.
The deficit narrowed as exports reached a record high and imports fell 0.9%.
The smaller-than-expected trade gap, combined with a stronger labour market and solid consumer spending, suggests that the US economy remains on a solid footing in the final quarter of the year.
While the data is unlikely to impact expectations that the Federal Reserve will cut interest rates again next month, it does reinforce the view that the central bank is not likely to pursue another 50 basis point rate reduction.
