Yen Drifts Back Towards 158.00 Amid Government Criticism
The Japanese Yen (JPY) has trimmed its gains against the US Dollar (USD) after an exceptional US-Japan coordinated intervention last week. The intervention triggered a 4.5% appreciation in the JPY, but it's now drifting back towards 158.00.
Analysts at Rabobank point out that the Japanese government has approved a plan to cut the sales tax on food for two years and is planning handouts to lower-income households in response to high living costs. However, this unfunded tax plan has drawn criticism from market participants, who will judge its credibility through the JPY's performance.
The Yen remains supported by a weak US Dollar due to soft US macroeconomic data, which has cast doubt on the momentum of the US labour market. The market consensus forecasts 80K new payrolls in July, up from June's 57K, but recent data has been disappointing. The ADP Employment Change report showed a 44K net employment growth in July, less than half of June's 98K rise.