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4 Sep 2015
Japan: Disappointed wage data but overall mixed sentiment - MUFG
FXStreet (Delhi) – Derek Halpenny, European Head of GMR at MUFG, notes that the BOJ’s optimism over the prospect of inflation is under scrutiny and the data today from Japan offered good and bad news on the prospect of getting the core nationwide annual CPI rate to target by the end of middle of next fiscal year.
Key Quotes
“After a 2.5% plunge in cash earnings in June due to bonus payment timing issues, the market was expecting a strong rebound – however, the annual rate jumped to just 0.6% in July.”
“With the yen now strengthening and equity markets falling, the risk remains high that the inflation target of 2.0% will remain elusive. Unlike the ECB, the BOJ is keen to play down the prospect of additional monetary easing but if the financial market turmoil continues much longer, the data from Japan suggests the BOJ will come under increasing pressure to act again – that should help to limit the downside for USD/JPY from here.”
Key Quotes
“After a 2.5% plunge in cash earnings in June due to bonus payment timing issues, the market was expecting a strong rebound – however, the annual rate jumped to just 0.6% in July.”
“With the yen now strengthening and equity markets falling, the risk remains high that the inflation target of 2.0% will remain elusive. Unlike the ECB, the BOJ is keen to play down the prospect of additional monetary easing but if the financial market turmoil continues much longer, the data from Japan suggests the BOJ will come under increasing pressure to act again – that should help to limit the downside for USD/JPY from here.”