Talking Points:
- The Yen edged up after supportive inflation, employment data
- BOJ target inflation gauge rose to the highest in over 2 years
- Labor-market figures pointing to robust pace of job creation
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The Japanese Yen traded higher after a supportive set of inflation and employment figures came across the wires. CPI excluding fresh food – the target inflation benchmark for the Bank of Japan – registered at 0.4 percent year-on-year, the highest in over 2 years.
The jobless rate shot up to 3.1 percent, but did so for the right reasons. The participation rate jumped to 60.8 percent, the highest in nine years, hinting that the increase from April’s 2.8 percent unemployment measure probably reflected previously discouraged workers’ return into the labor force.
Tellingly, the job-to-applicant ratio rose to 1.49, the highest in over four decades. That this occurred even as the number of employment seekers increased seems to hint at a rather robust pace of job creation. That may bode well for overall income and spending trends, which might ultimately help boost inflation further.
Still, concrete changes in BOJ monetary policy appear to be some way off, whichmight dilute the impact of incoming economic news-flow. In the meantime, sentiment trends might be a more potent driver for the usually anti-risk Japanese currency.
