USD/JPY Price Forecast Points to 150 After the Soft Earnings, Spending
The price action in the USD has been the main driver for USD/JPY since early January, however, the Bank of Japan has had its say, accelerating the bullish momentum. Today’s household cash earnings and spending came below expectations again, despite showing an improvement, which was no help for JPY buyers.
This forex pair made a strong reversal by the end of December and recovered from 140 lows, gaining around 8 cents in January as USD buyers returned to the market. However, we saw a drop ahead of the FOMC meeting, as markets expected a dovish decision. But the FED has been sounding hawkish since then and the amazing NFP jobs reports, together with positive corporate results from US have strengthened the bullish momentum for the USD pair, which sent this pair 200 pips higher in the last two days. Today’s earnings/spending report didn’t offer much, so buyers remain in charge.
Japanese Household Spending and Earnings Report for December
Household Spending:
- YoY (Year-over-Year):
- December: -2.5%
- Expected: -2.1%
- November: -2.9%
- MoM (Month-over-Month):
- December: -0.9%
- Expected: +0.2%
- November: -1.0%
These figures reflect a negative trend in household spending in Japan, comparing both year-over-year and month-over-month trends. However, the monthly number came below expectations as well.
Earnings:
- Overtime Pay:
- December: -0.7%
- Prior: +0.9%
- Overall Labor Cash Earnings (YoY):
- December: +1.0%
- Expected: +1.3%
- November: +0.2%
The data suggests a decline in household spending both on a yearly and monthly basis. On the earnings side, overtime pay has decreased, while overall labor cash earnings have increased but slightly below expectations. This is a significant miss on the m/m number, which may cause the BOJ to stop before its March 19 meeting. The BOJ stated that it is closely monitoring spring wage discussions, so markets are waiting for more data on the earnings front.
USD/JPY Daily Chart – Back Up Above MAs Again
USD/JPY ran into the resistance zone around 148.70-80 in late January and retreated 250 pips lower, but the decline stopped at the 20 SMA (gray) on the daily chart, which served as support. On Friday, the price jumped higher, erasing all the losses and climbing over the 100 daily SMA (green) again. However, the price has stalled near last week’s high, so we will see if the positive momentum from Friday continues into next week.
USD/JPY Live Chart
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