The yen has been weak due to low interest rates and other issues. 

The yen has weakened to the level of 150 yen per dollar, which is the weakest it has been since 2533 (Thai calendar). This depreciation is a result of the implementation of an ultra-loose monetary policy amidst rising interest rates and inflation globally.

The depreciation of the yen has prompted the Japanese government to intervene in the market to support the currency. These interventions have contributed to a strong stock market, particularly benefiting export-oriented companies that have gained from the weak yen.

Pierre-Olivier Gourinchas, the Head of the International Monetary Fund's Financial Research Division, stated that the Bank of Japan (BOJ) would need to continue its accommodative monetary policy. However, the BOJ must be cautious about the risks of excessive inflationary pressures.

In recent months, several companies in Japan have increased wages. Large companies, in particular, have implemented the fastest wage increases in three decades. This is in response to the desire to raise salaries in line with the inflationary pressures. However, household spending remains weak, indicating that the economic recovery is still relatively fragile.

Data reveals that regular employee salaries in Japan increased by 1.1% in April, which is the fastest growth in the past four months. However, at the same time, overtime pay decreased by 0.3%, marking the first decline in over two years. Salary data in Japan has been closely monitored by the market, as policymakers believe that economic growth can be driven by higher wages.

Takeshi Minami, Chief Economist at Norinchukin Research Institute, stated, "We still have to wait until May to see the overall picture and the results of labor negotiations, but the growth in April was not as strong as expected."

However, there is also data that reveals a decrease in household spending in Japan. In April, household spending declined by 4.4% compared to the previous year, which is higher than the market's expectation of a 2.3% decrease. This is the largest decline since February 2021. Spending on services also decreased by 1.9%, marking the first contraction in 13 months, while spending on goods decreased by 3.4% when comparing quarterly data.

These weak spending indicators suggest that the economic recovery is still fragile and will improve when consumer spending begins to recover. The global slowdown has had a significant impact on Japan's export sector, which is crucial for the overall economic outlook.

Technical analysis data (5H)

Resistance: 139.63, 139.75, 139.80

Support: 139.47, 139.41, 139.30

Source: Investing.com

 

Pivot Points June 7, 2023 11:06 AM GMT+7