BoJ's Wage Hopes Crushed as Yen Reverses Spike

The Japanese Yen experienced a significant spike on Wednesday following the release of strong wage data, only to recover and close near its opening price. The USD/JPY pair broke above 153.00 after the data was announced, but ultimately lost 147 pips of its gain by the end of trading.

Nominal pay in Japan rose 4.7% in July, marking the fastest growth since 1997. This is a significant development for the Bank of Japan (BoJ), which has been waiting for wage growth to improve before considering further tightening. The data also showed that real wages increased by 2.4%, and base pay rose 4.1%, both of which are the highest in about five years.

The strong wage data was expected to support the yen, but it had little impact on its price by the closing bell. Swaps market participants still put a high probability on a quarter-point hike next week, despite the data.