The Japanese yen is in negative territory on Friday. This follows a two-day rally which saw the yen jump 1.9% and hit a three-month high. In the European session, USD/JPY is trading at 151.94, up 0.39% on the day. On the data front, Japan’s household spending was much stronger than expected and the US releases nonfarm payrolls.
Japan’s household spending hits 2.5-year high
Japan’s household spending has been struggling as inflation remains relatively high. This made the December report a pleasant surprise, as household spending was much higher than expected. Annually, household spending climbed 2.7%, crushing the market estimate of 0.2% and rebounding from -0.4% in November. The monthly gain of 2.3% followed the November reading of 0.4% and beat the market estimate of -0.5%.
Household spending was the strongest since Aug. 2022, driven by strong wage gains. However, it is questionable whether the impressive gain is a temporary blip, given that the December wage growth was largely driven by bonuses. Still, real wages (adjusted for inflation) rose for a second straight month in December, which supports the case for the Bank of Japan to continue raising interest rates. BoJ policy makers have been unusually candid about plans to raise rates, although the timing is uncertain, with May or August strong possibilities for the next rate hike.
US Nonfarm Payrolls expected to drop
The US wraps up the week with nonfarm payrolls, one of the most important economic events. The market estimate stands at 170 thousand for January, after a surprisingly strong gain of 256 thousand in December. If the January forecast is accurate, it would mark a sharp drop that would make headlines, but is close to the past three-month average.
The Federal Reserve won’t be worried if job creation slows as long as the labor market is cooling at a slow pace. The Fed is expected to cut rates only once or twice this year, but that could change if inflation or the labor market provide any surprises.
USD/JPY technical
-
USD/JPY is testing resistance at 151.86. Next, there is resistance at 152.48.
-
150.83 and 150.21 are the next support levels.
This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors — not necessarily OANDA’s, its officers or directors. OANDA’s Terms of Use and Privacy Policy apply. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
Recommended Content
Editors’ Picks
AUD/USD: Recovery needs a stronger catalyst
Despite the US Dollar’s firm performance, AUD/USD managed to shake off four consecutive daily declines and retest the 0.6300 barrier, buoyed by widespread risk-on sentiment fuelled by Trump’s tariff headlines.
EUR/USD does not rule out extra declines
EUR/USD traded on the defensive in response to the continuation of the buying interest around the Greenback, dropping to three-week lows in the sub-1.0800 region.
Gold nears $3,000 amid tariffs’ optimism
The intense march north in the Greenback, in combination with the marked rebound in US yields across the curve are prompting Gold prices to recede to the proximity of the critical $3,000 mark per troy ounce.
Crypto Today: Trump’s tariff updates sparks Bitcoin rally, as AVAX, SOL, Chainlink lead altcoin gains
The US Fed decision to maintain rates unchanged last week ignited risk-on appetite across global risk assets markets. This saw demand for the US weaken 4% from its January peaks, according to Bloomberg.
Seven Fundamentals for the Week: Tariff news, fresh surveys, the Fed's preferred inflation gauge are eyed Premium
Reports and rumors ahead of Trump’s reciprocal tariffs announcement next week will continue moving markets. Business and consumer surveys will try to gauge where the US economy is heading. Core PCE, the Fed's preferred inflation gauge, is eyed late in the week.
The Best brokers to trade EUR/USD
SPONSORED Discover the top brokers for trading EUR/USD in 2025. Our list features brokers with competitive spreads, fast execution, and powerful platforms. Whether you're a beginner or an expert, find the right partner to navigate the dynamic Forex market.