The Japanese yen has seen limited movement despite wage data coming in better than expected. While the wage growth beat offers some optimism, real wage growth remains slightly negative, dampening its impact on monetary policy expectations.
At its most recent meeting, the Bank of Japan (BoJ) kept rates unchanged, as widely anticipated. However, Governor Kazuo Ueda delivered a less hawkish tone during the press conference. Ueda tied future rate hikes to sustained improvements in wage trends, with more clarity expected by March or April.
The market has now priced out the possibility of a January hike, focusing instead on the BoJ’s next meeting in March. Despite today’s wage data beat, this cautious stance has limited the yen’s upside potential.
Picture: USDJPY consolidates near 158.04, testing support as bearish momentum emerges following resistance at 158.55, as seen on the VT Markets app.
With Ueda’s hawkish stance and the dollar’s strength bearing down against market pairs, the Ninja has seen a dip of 0.17%. The pair closed at 158.036 after testing resistance near 158.55, reflecting market indecision.
The pair’s movements reflect broader market caution, driven by mixed signals from the US dollar and global bond markets. Concerns over the Bank of Japan’s potential policy changes are also adding to volatility, with traders awaiting clarity on interest rate trends.
While the market’s pricing for rate cuts remained largely unchanged, Federal Reserve Governor Christopher Waller reiterated that the pace of easing will be driven by inflation data.
Next week’s CPI report is expected to play a bigger role in shaping interest rate expectations than tomorrow’s NFP data, barring any major surprises.
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