Yen Gains as Japan’s Household Spend Beats Forecasts

Japanese Yen strengthened

The Japanese Yen strengthened moderately against the US Dollar in Asia Pacific trading session as the first Japanese data of a busy day came in a touch better than markets had expected.

Household spending fell 0.3% on the year in December. That may not sound like great shakes but it was a better showing than the 0.9% fall which forecasters were predicting. It was also better than November’s 1.5% slide, and the trend suggests that households are at least losing some of their fear of splurging, even if they are not about to set spendthrift records anytime soon.

Official employment data were released at the same time, and they were more or less in line. December’s jobless rate was 3.1%, exactly as expected and no change from November. The ratio of jobs to applicants ticked up to 1.43, above the 1.42 expected and the previous month’s 1.41.

The immigration issue

The immigration issue “is casing a huge public reaction not only from the U.S. corporate sector but also from the Republicans. This could prove a turning point for the Trump administration when one looks back at this event in the future”, said Minori Uchida, head of Tokyo global market research at Bank of Tokyo-Mitsubishi UFJ.

As widely expected, the BOJ stuck to its ultra-easy monetary policy on Tuesday and held back from raising its inflation forecast for the coming year, underlining its nervousness about the uncertain path of Trump’s policy. Investors are now shifting attention to BOJ Gov. Haruhiko Kuroda’s press conference and the central bank’s monthly bond purchase operation plans.

The BOJ kept intact its policy “as it doesn’t want to make big waves now,” said Uchida.

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