JPY Edges Higher on Hawkish BoJ Minutes, Wages Growth

The Japanese Yen (JPY) has edged higher on upbeat wages data and hawkish Bank of Japan (BoJ) minutes, but its gains are capped by concerns over Japan's fiscal situation.

According to government data released earlier today, real wages in Japan grew for the sixth consecutive month by 1.6% in June, backing the case for more interest rate hikes by the BoJ.

The BoJ minutes also revealed that the board voted 7-1 to raise the policy rate by 25 basis points (bps) to around 1.0%, or the highest level since 1995, amid the upside risk to inflation.

However, investors remain hopeful for a diplomatic resolution to end the US-Iran war after Secretary of the Treasury Scott Bessent said that the US and Iran were nearing an agreement, dragging crude oil prices to a nearly four-week low and easing inflation fears.

The persistently wide interest rate differential between Japan and other major economies might continue to fuel the so-called JPY carry trade and support the currency pair.