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Yen spikes then unwinds as Japan pay data stays solid
USD/JPY held just below 154.50 after a 153 pip round trip, with private consumption flat in the quarter and the current account swinging to a ¥2.988 trillion July surplus.
USD/JPY was steady just below 154.50 on Tuesday, following a sharp 153 pip move that effectively unwound earlier yen strength after Japan delivered its strongest pay data since 1997, according to FXStreet.
The yen move was tied to wage growth that showed little sign of disappointment, with nominal cash earnings rising 4.7% in July versus a 3.9% consensus and base pay up 4.1%, the fastest since April 1992. Real wages gained 2.4% for a seventh straight month of growth, while bonuses rose 6.3% and overtime slowed to 3.1%.
FXStreet also highlighted that the pay strength had already been priced in, and that remaining risk this week was limited since there were no Japanese releases scheduled in the four sessions left. It noted that Japan buys all of its crude oil from elsewhere and that crude had risen for six straight sessions since, though Tokyo has not defended a particular level at current prices.
Beyond wages, the outlet pointed to a revised second quarter with annualized growth lifted to 1.4% from a 1.1% consensus and the deflator steady at 2.6%, while private consumption did not move in the quarter. It added that Japan's foreign reserves fell 6.2% in August to $1.208 trillion, and that positioning through September 1 pointed to yen shorts rebuilding after a July intervention operation that had taken USD/JPY from the 164 area toward about 157.5 within two sessions.
Latest closeWTI crude $90.70 ▲0.5%|USD/JPY 158.82 ▼0.9%