Talking Points:
- Japanese cash earnings from labor beat consensus in April
- Overall earnings however were flat
- The Yen was already gaining, and continued to do so
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The Japanese Yen continued to gain on the US Dollar Tuesday following the release of stronger-than-expected cash earnings form the former’s home country. But it’s doubtful that the numbers were fully behind the move.
April cash earnings from labor rose 0.5% on the year, according to official figures. That was better than the 0.3% rise expected and the flat result seen in March. However, real cash earnings were flat once again as modest wage growth and prising prices offset gains in nominal pay.
The statistics office said that, while overseas demand has spurred Japan’s exports and output, wage growth continues to lag - weighing on both consumption spending and domestic demand. Still, the data was a very modest positive for the wage growth which the Japanese authorities would like to see. Admittedly gains are not strong, but earnings are at least moving in the direction which Tokyo would want.
It's certainly a better set of numbers than the previous month’s iteration. That was quite notably weak and knocked the Yen in consequence.
USD/JPY continued to drift lower through the Asia/Pacific morning. However it is more likely that a general haven bid for the Yen in the wake of weaker stock markets and looming uncertainties such as the UK’s June 8th election are behind the move.
--- Written by David Cottle, DailyFX Research
Contact and follow David on Twitter: @DavidCottleFX
