USD/JPY steady despite soft household spending – MarketPulse

The Japanese yen is calm on Friday. In the European session, USD/JPY is trading at 155.50, down 0.06% on the day at the time of writing.

Japan’s household spending slips

Japan’s economic activity has been sluggish and household spending, a key driver of economic growth, declined by 1.2% m/m in April. This followed a 1.2% gain in March and was well short of the market estimate of 0.2%. On a yearly basis, household spending rose 0.5%, up from -1.2% but short of the market estimate of 0.6%.

Japanese households have been curbing spending as inflation is high and economic conditions remain gloomy. On Monday, we’ll get a look at Japan’s GDP for the first quarter and the forecast is not looking good. The economy is expected to have contracted by 0.5% q/q in Q1 after no growth in the fourth quarter of 2023. This would point to the economy barely avoiding a recession. On an annualized basis, the economy is expected to have declined by 2% after a gain of 0.4% in the fourth quarter.

The Bank of Japan meets on June 14^th and a weak GDP report could complicate plans to tighten policy. The BoJ has hinted that it will continue on the path to normalization but if the central bank doesn’t make any moves at the June meeting, the weak Japanese yen could lose more ground.

In the US, the week wraps up with the nonfarm payrolls report for May. This release is one of the most important events on the data calendar but has found itself overshadowed by inflation releases. Still, nonfarm payrolls is a market-mover that can have a significant impact on the US dollar. The market estimate stands at 185,000 for May, little changed from the 175,000 gain in April.

USD/JPY Technical

• USD/JPY tested resistance at 155.81 earlier. Above, there is resistance at 156.21
• 155.19 was tested in support earlier. The next support level is 154.74

Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at info@marketpulse.com. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.