Yen Slides As Traders Focus On U.S. Jobs Data
07 Aprile 2023 - 9:48AM
RTTF2
The Japanese yen came under pressure against other major
currencies in the early European session on Friday, as trader's
focus on the U.S. jobs data for March due later in the day.
Meanwhile, the markets are closed on account of Good Friday holiday
today.
Traders remain cautious ahead of the unemployment and payrolls
data from the U.S. due later in the day, as it would provide
guidance on the strength of the labor market. The unemployment rate
is seen steady at 3.6 percent whereas addition to nonfarm payrolls
is seen at 239,000 compared to 311,000 a month earlier.
The Japanese central bank's holdings of Japanese government
bonds (JGBs) hit a record at the end of March.
The Bank of Japan's government bond holdings swelled to 581.72
trillion yen ($4.4 trillion) as of March, a record for any fiscal
year-end.
The 30-year JGB yield fell 3.5 basis points to 1.305% and the
40-year JGB yield fell 4 bps to 1.500%.
Sentiment among traders weakened after BoJ Governor Haruhiko
Kuroda delivered his last press conference. The term of the longest
serving governor comes to an end tomorrow. His successor, Kazuo
Ueda, will become BOJ chief on Sunday. Ueda's first policy meeting
will be held on April 27-28.
Speaking at his retirement news conference, BoJ's Kuroda said,
"Japan is seeing a broadening trend where rising inflation is being
reflected in wages."
"Japan has made steady progress toward sustainably, steadily
achieving BoJ's price target.", he said.
In economic news, data from the Ministry of Health, Labor, and
Welfare showed that Japan's real wages declined for the eleventh
straight month in February weighing heavily on household spending.
Inflation adjusted real wages decreased 2.6 percent annually, but
the pace of decline slowed from the 4.1 percent drop in January.
Real wages have been falling since April 2022.
Official data released earlier today showed that household
spending was up 1.6 percent in February following the 0.3 percent
contraction in January.
Japanese Prime Minister Fumio Kishida had urged business leaders
to hike salaries to help employees to fight high cost of living.
Many large companies are planning to lift salaries by more than 3
percent this year, which is likely to lift wage growth.
The BoJ continued to maintain an ultra-loose monetary policy
under the leadership of Haruhiko Kuroda. Markets expect a change in
the strategy after Kazuo Ueda takes office next week.
Data from the Cabinet Office showed that Japan's leading index
improved in February to the highest level in four months. The
leading index, which measures future economic activity, rose to
97.7 in February from a 26-month low of 96.6 in the previous
month.
The coincident index that measures the current economic
situation also rose to 99.2 in February from 96.4 in January.
In the European trading, the yen fell to 3-day lows of 131.95
against the U.S. dollar and 145.95 against the Swiss franc, from
early highs of 131.56 and 145.45, respectively. If the yen extends
its downtrend, it is likely to find support around 135.00 against
the greenback and 148.00 against the franc.
Against the euro and the pound, the yen dropped to 2-day lows of
144.01 and 164.28 from early highs of 143.62 and 163.68,
respectively. The yen may find support around 146.00 against the
euro and 168.00 against the pound.
Against the Australia, New Zealand and the Canadian dollars, the
yen edged down to 88.18, 82.56 and 97.77 from early highs of 87.82,
82.21 and 97.52, respectively. On the downside, the yen is likely
to find support around 92.00 against the aussie, 84.00 against the
kiwi and 99.00 against the loonie.
Looking ahead, U.S. unemployment rate and non-farm payrolls for
March are due to be released at 8:30 am ET.
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