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The USD/JPY is Eyeing 139.00 As Japan's Real Wages Tempt BoJ Conservatives And Yields Ease
USD/JPY accepts offers to reestablish intraday low, extending the week's initial decline. Since June 2021, Japan's Total Household Spending has declined the most, and real wages have declined for thirteen consecutive months. In addition to the easing of the Fed's hawkish bias, fresh banking problems, a light economic calendar, and a pre-FOMC blackout weigh on market sentiment. In the absence of top-tier data and events in Japan and the United States, risk catalysts are critical.
As Tokyo opens for trading on Tuesday, USD/JPY falls for the second consecutive day to approximately 139.40. In doing so, the Yen pair fails to validate weak Japan data while tracking weaker U.S. Treasury bond yields during a lackluster Asian session.
In spite of this, Japan's Total Household Spending decreased by -4.4% in April, compared to -2.3% expected and -1.9% previously. In the same vein, the nation's Labor Cash Earnings decreased 1.3% from previous readings of 0.8% and market predictions of 0.5%. Reuters reported that the nation's Inflation-adjusted real wages fell 3.0% from a year earlier in April, a faster decline than the revised 2.3% decline in March.
The Japanese Yen (JPY) is able to prolong its week-beginning strength due to Japanese data indicating inflation's negative impact on earnings, which in turn pushes Bank of Japan (BoJ) hawks.
In addition to the data, Monday's rumors of a possible Japanese government intervention to defend the yen also impact on the USD/JPY exchange rate. In spite of this, Reuters released a report indicating that wagers against the Japanese Yen have increased to $8.6 billion equivalent, a level comparable to last year's intervention by Japanese authorities.
In contrast, the US ISM Services PMI fell to 50.3 in May compared to 51.5 anticipated and 51.9 previously, while Factory Orders growth deteriorated to 0.4% compared to 0.5% market forecasts and 0.8% previous readings. It should be noted that the final May readings of the S&P Global Composite PMI and Services PMI also indicated a decline.
It should be noted that the market's bets on a Fed rate increase in June fell from around 80% in the middle of last week to nearly 25% as a result of the mixed US data. Similarly, the absence of Fed discussions could have weighed on US Treasury bond yields and the US Dollar. After reversing Friday's rebound the previous day, US 10-year Treasury bond yields remain under pressure around 3.68%, while two-year bond coupons defend the week-start adverse bias near 4.46% as of press time.
Wall Street closed in the red as a result of these moves, whereas S&P500 Futures show slight losses as of press time.
A lack of significant data/events in the near future may keep the USD/JPY pair susceptible to risk catalysts for clear direction.
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