Yen in Trouble? Japan’s Weak Wage Data Shakes Rate Hike Hopes
The Japanese Yen continued to weaken on Monday, with USD/JPY rising above the key 145 mark. This drop came after Japan reported disappointing wage growth data for May. Real wages, which show actual buying power after adjusting for inflation, fell by 2.9%. This is the biggest drop in almost two years and marks the fifth month in a row of wage decline.
Nominal wages (before adjusting for inflation) also remained low, rising just 1.0% as bonus payments fell sharply by 18.7%. This shows that Japanese workers are earning less, and that could hurt household spending—a key factor the Bank of Japan (BoJ) watches closely.
Due to this weak wage growth, hopes of the BoJ raising interest rates soon have faded. At the same time, fears of new U.S. tariffs on Japanese goods are growing. This could affect Japanese companies, reduce profits, and possibly delay wage increases even more.
Despite the fall, some support for the Yen still exists. Traders expect the BoJ might raise rates later this year, and there’s also talk that the U.S. Federal Reserve could start cutting rates if the American economy slows.
Impact:
The Yen could stay under pressure in the short term. Weak wage data and rising trade risks might possibly delay BoJ’s rate hike plans.