USDJPY edged higher to 155.30 on Wednesday, up 0.28% for the day.
During Wednesday’s early Asian trading hours, the USDJPY pair strengthened near 155.30. The interest rate divergence between the Fed and the BoJ continues to provide a tailwind for the pair. The US ISM services PMI data will be widely followed on Wednesday. Ahead of the highly anticipated Nonfarm Payrolls (NFP) report, which is due Friday.
Japan’s labor cash earnings increased by 2.1% year on year, compared to a previous 1.0% growth, which was more than projected.
Japan’s Labor Cash Earnings rose 2.1% YoY in April’s report of a 1.0% increase (raised from 0.6%) was higher than the market consensus of 1.7%. With labor cash wages rising faster than expected. The Bank of Japan (BoJ) will be under pressure to begin tightening its easy monetary policy stance, which has put some selling pressure on the JPY until 2024. Meanwhile, the interest rate differential between the United States and Japan continued to weaken the yen and limit the downside for the USD/JPY pair.
On Tuesday, Bank of Japan Deputy Governor Ryozo Himino stated. That the central bank must be “very vigilant” about the impact of JPY movements on the economy. Himino stated that the Japanese Yen’s weakness will be one of the variables influencing the timing of its next. Increased interest rates.
The weak US Manufacturing PMI in May raised the prospect of the Fed cutting interest rates for the first time in September.
The weaker US Manufacturing PMI in May raised the probability of the US Federal Reserve (Fed) cutting interest rates for the first time in September. According to the CME FedWatch Tool, traders now expect the Fed to decrease interest rates in September by about 54.9%, up from 49% at the end of last week. Investors will take more clues from the US ISM services PMI data, which is expected to improve to 50.5 in May from 49.4 the previous month. On Tuesday, the US JOLTs Job Openings dropped from 8.355 million to 8.059 million in April. Falling short of the market forecast of 8.34 million.
