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Japanese wage rises push USD/JPY lower

Some of the largest Japanese unions has just now agreed their latest pay rounds and they have mostly been above 5%. Now that is quite a big deal in a zero interest rate economy. These sizeable increases are the biggest in decades and come ahead of that all important Bank of Japan policy meeting next week. The pressure is on the Japanese central Bank to abandon their decades long monetary policy stance. That is why the USD/JPY is not above 150 anymore and has recently fallen to test the 146.50 level. Of course much will depend on not just an abandonment of that policy, but the pace and breadth of any rate change. Meantime, the dollar had been the focus yesterday and higher US yields, which pushed the USD/JPY back above 148 yesterday. It closed in US last night at 148.33. Earlier today it extended that positive close to 148.66, but it has backed off again now, as the impact of those higher wage deals fuels a rebound in the Yen. The USD/JPY is currently trading at 148.19
 

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