Skip to content USDJPY Fundamental Analysis – 5-September-2024
The Japanese yen has recently strengthened, stabilizing around $143.2 (USD/JPY), its highest level in about a month. This movement is closely linked to fresh economic data showing that real wages in Japan increased for the second consecutive month in July.
The wage rise, adjusted for inflation, climbed by 0.4% year-on-year, while total earnings grew by 3.6%. This steady wage growth aligns with the Bank of Japan’s forecast of moderate economic improvement, higher wages, and increased inflation, further fueling predictions that the central bank might raise interest rates before the end of the year.
Safe-Haven Appeal Amid Global Economic Concerns
In addition to wage growth, the yen has been drawing strength from its safe-haven status. Global investors have been seeking stability due to concerns about a potential recession in the United States, as recent economic reports have revealed weakness in some key areas.
This uncertainty boosts demand for safer assets like the yen, as it offers a reliable option.
Federal Reserve Moves Could Impact Yen Further
Another factor supporting the yen is the growing speculation that the U.S. Federal Reserve might reduce interest rates more aggressively than expected to avoid a deeper economic downturn.
If the Fed makes these cuts, it could further weaken the U.S. dollar, making the yen an even more attractive option for investors. These combined factors suggest the yen could continue its upward trend in the coming months.
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