Japanese yen dips, wage growth falls

USD/JPY was sailing in calm waters on Tuesday but has gained ground in the North American session. The yen is trading at 123.25, up 0.40% on the day.

Kuroda talks tough about the yen

Similar to what we saw last week, Japanese officials were talking about the yen, expressing concern about currency movements. BOJ Governor Kuroda used strong language in remarks earlier today, noting that “the recent moves in exchange rates seem somewhat rapid”. It’s becoming confusing what to make of Kuroda, as just last week he said that a weak yen was good for Japan’s economy. Perhaps weak means “weak but not too weak”. If today’s comments were meant to prop up the yen, it didn’t work very well as USD/JPY recovered after minimal losses and has punched above the 123 line.

Market participants eyeing the exchange rate will be giving far more weight to further BoJ intervention to protect the yield curve rather than comments from senior officials. With the BoJ stuck on an ultra-loose policy which is unlikely to change given the sluggish economy, I would pick the yen to hit 125 rather than fall to 120 in the short term. US Treasury yields are moving higher and the 10-year yield hit 2.48% earlier today, and a widening US/Japan rate differential will put pressure on the yen.

The weaker yen and soaring energy prices are taking their toll on Japanese consumers. Household Spending in February fell by 2.80% YoY, and real wages, a barometer of consumer purchasing power, were flat on an annual basis, as inflation continues to erode at household income. Prices for food, energy and commodities continue to rise, exacerbated by the ongoing war in Ukraine. Consumers are feeling the pinch as inflation accelerates, and consumer confidence indicators are likely to continue to show a pessimistic outlook about the economy.


USD/JPY Technical

  • USD/JPY has support at 121.25 and 119.16
  • 123.25 is under pressure resistance. Above there is resistance at 124.67

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Kenny Fisher

Kenny Fisher

Market Analyst at OANDA
A highly experienced financial market analyst with a focus on fundamental analysis, Kenneth Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in several major online financial publications including Investing.com, Seeking Alpha and FXStreet. Based in Israel, Kenny has been a MarketPulse contributor since 2012.