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Japanese Yen Gains on Better Employment Figures, In-Line CPI

Japanese Yen Gains on Better Employment Figures, In-Line CPI

Daniel Dubrovsky, Strategist

Talking Points:

  • The Japanese Yen strengthened after encouraging employment and in-line CPI readings
  • Jobless rate fell to 2.8%, labor force participation and job-to-applicant ratio increased
  • The in-line inflation readings followed a downgrade in Bank of Japan CPI projections

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The Japanese Yen enjoyed a moment of appreciation after a set of encouraging employment and in-line CPI readings crossed the wires. Starting with prices, CPI excluding fresh food – which is the target inflation benchmark for the Bank of Japan – held steady at 0.4 percent y/y in June, the highest in over 2 years.

Meanwhile, the jobless rate fell to 2.8% against expectations of it declining to 3.0%. The labor force participation rate shot up to 61.0% from 60.8%, the highest in over nine years. In addition, the job-to-applicant ratio increased to 1.51 from 1.49, beating estimates of it rising to 1.50. The rosy readings might have reflect a robust labor market that may end up boosting inflation down the road.

Even so, the Bank of Japan seems cautious considering that their inflation expectations were downgraded in their most recent monetary policy announcement. Prices are now no longer expected to reach the 2 percent target rate until at least 2020/2021. When you consider their price outlook adjustment, perhaps an in-line inflation report is not terribly bad.

Japanese Yen Gains on Better Employment Figures, In-Line CPI

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