Official data showed US personnal income rose 0.3% in July, beating estimates of a 0.2% rise, and up from June's 0.2% increase.
Official data showed US personal spending up 0.5% in July, matching expectations and up from 0.3% in the previous reading.
- Renewed Inflationary pressures on BOJ
- Bullish remarks from BOJ Governor Kazuo Ueda
Yen rose in Asian trade on Friday against a basket of major rivals for the first session in three against the dollar after Tokyo consumer prices data showed renewed inflationary pressures on policymakers.
Yen is about to mark the second monthly profit in a row, following more aggressive remarks by BOJ Governor Ueda, which boosted the odds of a third interest rate hike this year, in turn pressuring yen carry trades.
The Price
The USD/JPY pair lost 0.25% today to 144.65, with a session-high at 145.07.
The yen lost 0.3% against the dollar on Wednesday following strong US GDP growth data.
Inflation
Official data showed Tokyo’s consumer prices up 2.4% y/y in August, beating estimates of 2.2%.
Japanese prices continued to accelerate above the 2% official target, in turn paving the way for another BOJ rate hike this year.
Monthly Trades
Yen is up 3.5% so far this month against the dollar on track for the second monthly profit in a row.
The gains came as traders continued to unwind their yen carry trades, amid full pricing for a US rate cut in September and after recent remarks by Ueda.
Ueda
A special National Diet session was held last Friday to discuss the Bank of Japan’s surprise move to raise interest rates last month and normalize policies.
Kazuo Ueda said that a rate hike in July was in line with the central bank’s economic outlook, asserting the bank is ready to adjust its policies if the economy moved as expected.
He said that recent changes to the monetary policy were suitable, and he warned from any sudden moves in the forex impact, the impact of such moves on prices and wages.
Ueda said that extreme volatility in the exchange price impacts inflation outlook.
He believes that interest rates could reach neutral levels if data matches the outlook until 2026.
Japanese Rates
Following Ueda’s speech, traders put a 70% chance for a December rate hike by the Bank of Japan.
US stock indices rose on Thursday after a batch of positive employment and growth data.
Earlier government data showed US GDP growth at 3.0% in the second quarter, passing estimates of 2.8%, and up from 1.4% in the first quarter.
US unemployment claims fell to 231 thousand in the week ending August 24 from 233 thousand in the previous reading.
Now investors await personal spending data, the Federal Reserve’s favorite inflation gauge, tomorrow.
On trading, Dow Jones rose 1.1% as of 17:16 GMT to 41,509, while S&P 500 rose 0.8% to 5641, as NASDAQ spiked 1.2% to 17,760.
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