It seems that the Japanese yen (unlike the greenback) can’t get rid of poor economic data. Poor February exports figures of -1.20% (prior: -8.40%) in negative territory for the third consecutive time as well as low February wage earnings, down 0.80% following January revised -0.60% figures from a 1.20% increase poses questions over the achievement of Prime Minister Shinzo Abe “Abenomics” program.
Indeed, as the labour market remains at its lowest historical range and considering the country’s CPI ex. food at 0.70% in February, it appears that the program’s objectives of rising wages and prices poses further concerns to investors. Furthermore, the news is also unwelcomed by the BoJ whose loose monetary policy is not enough to approach the 2% inflation target.
It is therefore very likely that Japan’s wage growth, a major contributor of consumer prices, remains within the range of 1% by year-end, thus making it very difficult to reach the price target in 2019.
USD/JPY will be largely influenced by today’s US job data figures. It is assumed that March Non-farm payrolls data should rebound following a massive drop of 20K in February while unemployment rate and hourly earnings figures are expected to be flat.
Currently trading at 111.69, USD/JPY is heading along 111.90 short-term.
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By Vincent Mivelaz