The Japanese yen is showing movement in both directions today. In the North American session, USD/JPY is trading at 147.37, down 0.03% on the day.
Japan's GDP expanded 2.2% y/y in the fourth quarter of 2024, lower than the initial estimate of 2.8%. The revision was expected to stay largely unchanged but was pushed lower due to a decrease in inventories and consumption.
The GDP downward revision follows other soft data which points to weakness in Japan's economy. Household spending slumped 4.5% m/m in January. This was a sharp reversal from the 2.3% gain in December and missed the estimate of -1.9%. Annualized, household spending rose 0.8%, below the 2.7% in December and the market estimate of 3.6%. On Monday, the wage growth report indicated that real wages declined by 1.8% in January, after two months of growth.
How will the Bank of Japan react to the string of weak data? The annual wage negotiations are close to the end and the BoJ has urged companies and workers to reach a deal that significantly raises wages. This would boost growth and consumption and help keep inflation sustainable at the BoJ's 2% target.
The unions are asking for an average wage hike of 6%, up from 5.85% last year and the highest in more than 20 years. Last year's wage agreement led to the BoJ raising rates for the first time since 2007 and this year's wage deal could pave the way for another rate hike. The BoJ holds its next meeting on Mar. 19, five days after the wage settlement will be announced. The BoJ isn't expected to make a move next week but investors are circling April or May as potential rate-hike meetings.
There is resistance at 147.30 and 147.97
146.59 and 145.92 are the next support levels
Japan's GDP expanded 2.2% y/y in the fourth quarter of 2024, lower than the initial estimate of 2.8%. The revision was expected to stay largely unchanged but was pushed lower due to a decrease in inventories and consumption.
The GDP downward revision follows other soft data which points to weakness in Japan's economy. Household spending slumped 4.5% m/m in January. This was a sharp reversal from the 2.3% gain in December and missed the estimate of -1.9%. Annualized, household spending rose 0.8%, below the 2.7% in December and the market estimate of 3.6%. On Monday, the wage growth report indicated that real wages declined by 1.8% in January, after two months of growth.
How will the Bank of Japan react to the string of weak data? The annual wage negotiations are close to the end and the BoJ has urged companies and workers to reach a deal that significantly raises wages. This would boost growth and consumption and help keep inflation sustainable at the BoJ's 2% target.
The unions are asking for an average wage hike of 6%, up from 5.85% last year and the highest in more than 20 years. Last year's wage agreement led to the BoJ raising rates for the first time since 2007 and this year's wage deal could pave the way for another rate hike. The BoJ holds its next meeting on Mar. 19, five days after the wage settlement will be announced. The BoJ isn't expected to make a move next week but investors are circling April or May as potential rate-hike meetings.
There is resistance at 147.30 and 147.97
146.59 and 145.92 are the next support levels
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Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.