{"id":1461261,"date":"2024-03-07T14:50:00","date_gmt":"2024-03-07T19:50:00","guid":{"rendered":"https:\/\/bugaluu.com\/news\/?p=1461261"},"modified":"2024-03-07T14:50:00","modified_gmt":"2024-03-07T19:50:00","slug":"usdjpy-plunges-as-soaring-japanese-wage-growth-sparks-surge-in-boj-rate-hike-odds","status":"publish","type":"post","link":"https:\/\/bugaluu.com\/news\/usdjpy-plunges-as-soaring-japanese-wage-growth-sparks-surge-in-boj-rate-hike-odds\/1461261\/","title":{"rendered":"USDJPY Plunges As Soaring Japanese Wage Growth Sparks Surge in BoJ Rate-Hike Odds"},"content":{"rendered":"

USDJPY Plunges As Soaring Japanese Wage Growth Sparks Surge in BoJ Rate-Hike Odds<\/span><\/p>\n

\n

There was notable weakness in Japanese stocks overnight after Japanese wage growth accelerated to the fastest clip since June<\/strong>.<\/p>\n

<\/a><\/p>\n

While the basic wage trend unchanged, overall wage growth was lifted by the special wage:<\/strong><\/p>\n

According to monthly wage data released by the Ministry of Health, Labour and Welfare (MHLW), nominal cash wage growth accelerated to +2.0% yoy in January, from +0.8% in December. <\/strong>Growth on a reference “same sample” basis (unaffected by changes in the survey sample) was +2.0%, with growth remaining at the same level since November last year. <\/em><\/p>\n

The special wage rose sharply by +16.2% yoy and lifted overall wage growth by +0.6 pp. The special wage tends to fluctuate sharply and is particularly susceptible to sample bias. <\/strong>Growth in the special wage on a reference “same sample” basis rose only +5.9%.<\/em><\/p>\n

<\/a><\/p>\n

Source: Goldman Sachs<\/em><\/p>\n

The picture is not a pretty one for the average Jo-san as ‘real’ wages continue to sink…<\/p>\n

<\/a><\/p>\n

Source: Goldman Sachs<\/em><\/p>\n

…which has prompted labor unions to make the\u00a0strongest\u00a0pay demands in three decades.<\/strong><\/p>\n

Rengo, Japan\u2019s largest labor union federation, announced in the afternoon that the average demand made by its unions this year was 5.85%, the biggest figure in three decades, compared with an initial figure of 4.49% a year ago. Stronger demands from unions this year will bode well for the initial results of Rengo wage talks due for release on March 15.<\/p>\n

<\/a><\/p>\n

Source: Goldman Sachs<\/em><\/p>\n

Prime Minister\u00a0Fumio Kishida\u00a0has personally lobbied executives for large wage increases,<\/strong> as he seeks to mollify consumers frustrated over persistent inflation. His government has implemented a number of measures to that end, including tax breaks for companies that raise wages.<\/p>\n

This surprise jump in wage growth prompted speculation that the BoJ will move to hike rates this month for the first time since 2007.<\/strong><\/p>\n

\u201cAll of a sudden March looks like it\u2019s live, and just a few weeks ago that was much less clear,\u201d said\u00a0Michael Metcalfe, global head of macro strategy at State Street Global Markets. <\/em><\/p>\n

\u201cThe BOJ has a history of surprising the market, and it doesn\u2019t seem to do forward guidance like other central banks, so there is going to be volatility around and ahead of the meetings.\u201d<\/em><\/p>\n

Bets on a hike at the March 18-19 meeting are gaining traction (almost 80%) <\/strong>as Bloomberg reports or rumors emerging that some BOJ officials\u00a0favor\u00a0an early move while some\u00a0government officials\u00a0also support a rate hike.<\/p>\n

<\/a><\/p>\n

Source: Bloomberg<\/em><\/p>\n

…and smashed USDJPY down 3 handles (yen stronger)…<\/p>\n

<\/a><\/p>\n

Source: Bloomberg<\/em><\/p>\n

\u201cEverything is pointing to yen buying,\u201d <\/strong><\/em>said\u00a0Takeshi Ishida, a strategist at Resona Holdings Inc. in Tokyo.<\/p>\n

\u201cAfter an excessive drop in yen volatility and a buildup of yen shorts, both are susceptible to unwinding.\u201d<\/em><\/p>\n

Bloomberg reports that BOJ officials are getting more confident over the strength of wage growth, according to people familiar with the matter, a view board member\u00a0Junko Nakagawa\u00a0backed on Thursday.<\/p>\n

\u201cThere are signs of a clear shift in businesses\u2019 behavior for setting wages,\u201d<\/strong><\/em> Nakagawa said during a speech in Shimane, western Japan.<\/p>\n

\u201cJapan\u2019s economy and inflation are steadily making progress toward meeting the stable 2% inflation target.\u201d<\/em><\/p>\n

The first stop for USDJPY will be 142 based on inflation-adjusted rate differentials,<\/strong> which would imply an upside of 4% from its current levels. Beyond there, its fortunes will lie in the evolution of the interest-rate outlook in the US.<\/p>\n

However, as Ven Ram noted yesterday<\/a>, just getting to zero-bound won\u2019t do the trick for the yen. With realized inflation still running above 2%, the BOJ\u2019s policy rate needs to get a lot higher for inflation-adjusted rates to start biting – and for the yen to keep climbing from here.<\/p>\n

Even so, the next 5% or so is the relatively\u00a0easy part\u00a0of the yen to climb against the dollar.<\/strong> But its potential goes far beyond – and a lot of that will come down how far the BOJ is willing to go.<\/p>\n<\/div>\n

Tyler Durden<\/a><\/span>
\nThu, 03\/07\/2024 – 09:50<\/span><\/p>\n

\u200bhttps:\/\/www.zerohedge.com\/markets\/usdjpy-plunges-soaring-japanese-wage-growth-sparks-surge-boj-rate-hike-odds<\/a>\u00a0<\/p>\n

\u00a0<\/p>\n","protected":false},"excerpt":{"rendered":"

USDJPY Plunges As Soaring Japanese Wage Growth Sparks Surge in BoJ Rate-Hike Odds There was notable weakness in Japanese stocks overnight after Japanese wage growth…<\/p>\n","protected":false},"author":0,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-1461261","post","type-post","status-publish","format-standard","hentry","category-news","wpcat-1-id"],"_links":{"self":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/posts\/1461261","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/comments?post=1461261"}],"version-history":[{"count":0,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/posts\/1461261\/revisions"}],"wp:attachment":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/media?parent=1461261"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/categories?post=1461261"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/tags?post=1461261"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}