USD/JPY Plummets as Japan Wage Data Surges

The USD/JPY currency pair has been experiencing volatility in recent sessions, with prices dropping over seven yen in five trading days. The pair had previously broken and recovered the 154.00 level repeatedly, but is now seen clustering in the low 150s.

Japan's wage data released last week showed nominal cash earnings rose 4.7% versus a 3.9% consensus, the fastest since January 1997. Base pay increased 4.1%, the quickest since April 1992, while real wages gained 2.4%, marking a seventh straight rise and the best in five years.

The spring wage round reached 5.01% for a third year above 5%, and revised Q2 annualised growth was lifted to 1.4% versus 1.1% expected with the deflator steady at 2.6%. Bonuses jumped 6.3% after a revised 4.7%, overtime slowed to 3.1%, the bonuses-and-overtime-stripped measure rose 2.7%, and private consumption was flat.

The current account shifted to a ¥2.988 trillion July surplus from a ¥92.3 billion deficit, while the labour ministry gauge rose to 2.2% from 1.9%. Japan's foreign reserves fell 6.2% in August to $1.208 trillion, with securities down $87.8 billion.

The upcoming US data releases include PPI on Thursday at 12:30 GMT seen at 0.4% m/m after flat July and 5.3% y/y after 4.7%, with core at 0.3% and 4.6%. Friday brings CPI at 12:30 GMT seen at 0.4% m/m, 3.4% y/y and 2.4% core.