Talking Points:
- Japanese Yen little-changed vs. US Dollar after soft earnings data
- Real cash earnings 0.2% vs. 0.5 expected, down from 4-year high
- Market may expect for this data not to alter BoJ policy outlook
The Japanese Yen showed a tepid reaction against the US Dollar as the former currency absorbed soft labor earnings data. Japan’s labor cash earnings came in at 0.5 percent year-over-year as opposed to the 0.6 percent expectation for August. This print was a drop from the seven month high at 0.9 percent revised reading in July. Real cash earnings also came in lower than the consensus forecast of 0.5 percent year-over-year. The adjusted-for-inflation measure for the labor market’s earnings was 0.2 percent in August. This figure was a decline from the four year high of July’s revised figure at 0.5 percent.
The mild reaction of the exchange rate may be due to the market’s expectation that this data will not weigh heavily on the Bank of Japan’s upcoming monetary policy announcement. In the central bank’s September statement, it said that it will increase the monetary base by an annual pace of ¥80 trillion. This policy is widely expected to remain unchanged when the BOJ delivers its next rate decision on October 7th.
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