USD/JPY rises 100 pips after wage knowledge disappoints. Eyes on the BOJ

USD/JPY is in focus at the moment after November wage data confirmed one other deep fall, doubtlessly derailing plans for the Financial institution of Japan to start normalizing coverage this yr.

Labour money earnings rose simply +0.2% year-over-year in comparison with 1.5% anticipated. Actual wages fell 3.0% y/y.

Initially USD/JPY was little moved on the info however the Financial institution of Japan is intently watching spring wage negotiations, in accordance with a report final month from Nikkei.

These numbers are clearly disappointing however there may be a boomerang impact coming into play. Nobody tolerates actual wages falling so the misses in 2023 may solely put extra upward stress on 2024 wage negotiations.

The Japanese Commerce Union Confederation (JTUC, extra generally often called Rengo) will demand 5% or extra in spring wage negotiations and they’re going to have good purpose for asking for that a lot. Nonetheless this knowledge level actually raises the stakes and can lead the unions to dig in exhausting, doubtlessly resulting in strikes.

These are all good questions for BOJ Governor Kazuo Ueda on the January 23 BOJ assembly.

Technically, the 146.00/146.10 zone is the realm to look at as that was the place the spike earlier this month topped out. Past that’s the 61.8% retracement stage at 147.46.

The following transfer will come from the US greenback aspect with CPI knowledge due tomorrow and a 10-year Treasury public sale due at the moment. Yesterday’s 3-year sale was sturdy and if we see one thing comparable from the bond market at the moment coupled with a low CPI report, the greenback aspect might actually soften.