The Japanese yen is strengthening, and the USDJPY pair has chugged again after the Kyodo news agency reported a negotiated 5% wage hike by Japanese unions. Traders are concerned that the Rengo negotiations could be the missing brick for the BoJ in a potential policy change. JIJI relayed that the Bank of Japan is now making its final analyses on how to exit the era of negative interest rates.
- Japan's annual wage hike was 5.28%, compared to 3.8% a year earlier, indicating the highest wage increases in more than 30 years. The minimum wage is set to rise 3.7% vs. 2.33% in 2023. Japan's Finance Minister Suzuki indicated that the government will do everything possible to ensure that wage increases continue and that deflation is no longer a problem in the country.
- Japanese prime minister Kishida informed about wage increases flowing strongly and positive trends in personal consumption. He also signaled that also consumer sentiments improvement, which makes moderate prices to rise. However, the Japanese policymakers stressed that the decision and interpretation of economic indicators rests solely with the BoJ.
USDJPY (M1)
USDJPY loses, however, final market reaction to today information is still unclear. If BoJ will be not very hawkish, markets may see it as a disappointment and weaken yen amid extremely dovish policy despite rising prices and wages.
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Source: xStation5
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