2 May 2014
Japanese employment figures improve - BTMU
FXStreet (Barcelona) - Derek Halpenny, European Head of Currency Strategy at the Bank of Tokyo Mitsubishi UFJ, assessed the recent upbeat news from the Japanese labour market.
Key Quotes
"In Asia today, the news flow was light but there was some good news for the BOJ with ongoing evidence of labour market improvement highlighted in a further advance in the jobs-to-applicant ratio from 1.05 in February to 1.07 in March. Recall that the BOJ’s reasoning behind its belief that the annual core CPI rate will reach 2.1% in FY16 is that a tightening labour market will lift wages and higher household inflation expectations."
"The 1.07 reading is now just below the last cyclical high of 1.08 recorded in July 2006 and should help lift wages going forward, especially given the job-to-applicant ratio is expected to continue to move higher. The new jobs-to-applicant ratio has already surpassed the 2006 high and last month hit a peak last recorded in 1992."
"USD/JPY looks well supported at current levels and with the BOJ confident that its inflation goal can be achieved the BOJ is unlikely to be a driver of yen weakness any time soon. Hence, an improving US economy and higher US yields remain the likely scenario for pushing USD/JPY higher from here."
Key Quotes
"In Asia today, the news flow was light but there was some good news for the BOJ with ongoing evidence of labour market improvement highlighted in a further advance in the jobs-to-applicant ratio from 1.05 in February to 1.07 in March. Recall that the BOJ’s reasoning behind its belief that the annual core CPI rate will reach 2.1% in FY16 is that a tightening labour market will lift wages and higher household inflation expectations."
"The 1.07 reading is now just below the last cyclical high of 1.08 recorded in July 2006 and should help lift wages going forward, especially given the job-to-applicant ratio is expected to continue to move higher. The new jobs-to-applicant ratio has already surpassed the 2006 high and last month hit a peak last recorded in 1992."
"USD/JPY looks well supported at current levels and with the BOJ confident that its inflation goal can be achieved the BOJ is unlikely to be a driver of yen weakness any time soon. Hence, an improving US economy and higher US yields remain the likely scenario for pushing USD/JPY higher from here."