Skip to content USDJPY Fundamental Analysis – 6-September-2024
The Japanese yen has increased above $142 (USD/JPY), its most substantial monthly level. This increase is happening because the Bank of Japan (BOJ) is expected to raise interest rates again. The reason for this is Japan’s ongoing rise in inflation and wages.
Wages in Japan Continue to Grow
Recently, data showed that real wages in Japan grew for the second month in July. This was a 0.4% yearly wage rise, with overall cash earnings increasing by 3.6%. This wage growth is seen as a key factor pushing the BOJ to consider further tightening its monetary policy.
Household Spending Below Expectations
However, not all economic signs are vital. Data also revealed that household spending in Japan was lower than what experts had predicted for July. This slower spending growth could concern the BOJ as it considers its next move since consumer spending is vital to economic health.
Bank of Japan Could Make More Policy Changes
BOJ policymakers have stated that they are ready to make more adjustments if their economic and price forecasts are met. Investors are now expecting the BOJ to raise interest rates again in December. This is part of their strategy to control inflation and balance economic growth.
U.S. Federal Reserve Likely to Cut Rates Soon
Meanwhile, in the U.S., the Federal Reserve is expected to take a different path. Due to challenges in the labor market and signs of a weakening economy, many believe the Fed will start lowering interest rates soon.
This shift could affect global markets, including the yen and dollar exchange rates.
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