Select Language

Japanese Yen rises on strong data, USD pressured by Fed rate cut bets ahead of US NFP

Breaking news

Japanese Yen rises on strong data, USD pressured by Fed rate cut bets ahead of US NFP

  • X
  • facebook
  • LINE
  • RSS

  • X
  • facebook
  • LINE
  • RSS
New update 2025.09.05 11:20
Japanese Yen rises on strong data, USD pressured by Fed rate cut bets ahead of US NFP

update 2025.09.05 11:20

  • The Japanese Yen regains positive traction on Friday in reaction to upbeat domestic data.
  • Furthermore, trade optimism overshadows the risk-on mood and further supports the JPY.
  • Fed rate cut bets undermine the USD and also weigh on USD/JPY ahead of the US NFP report.

The Japanese Yen (JPY) strengthened against its American counterpart during the Asian session on Friday in response to upbeat domestic data, which showed that real wages turned positive for the first time in seven months. Moreover, a rise in Japan's household spending in July, although at a slower-than-expected pace, reaffirms market bets that the Bank of Japan (BoJ) will stick to its policy normalization path. This comes after US President Donald Trump signed an executive order on Thursday to lower Japanese auto import tariffs and provide a modest lift to the JPY.

Meanwhile, market participants remain divided over the likely timing and pace of BoJ rate hikes. This, along with a generally positive risk tone, could act as a headwind for the safe-haven JPY. Furthermore, traders might also opt to wait for the release of the US Nonfarm Payrolls (NFP) report for more cues about the Federal Reserve's (Fed) rate-cut path, which, in turn, will drive the US Dollar (USD) and provide a fresh impetus to the USD/JPY pair. Nevertheless, the fundamental backdrop seems tilted in favor of the JPY and backs the case for further gains.

Japanese Yen bulls look to seize control as upbeat domestic data reaffirms BoJ rate hike bets

  • Data published by the Labour Ministry earlier this Friday showed that Japan's nominal wages rose 4.1% year-on-year in July 2025, the fastest pace in seven months and above expectations for a 3% increase. Moreover, inflation-adjusted real wages, a key gauge of household purchasing power, turned positive for the first time since December and climbed 0.5% in July.
  • Meanwhile, the consumer inflation rate the ministry uses to calculate real wages, which includes fresh food prices but not rent costs, rose 3.6% year-on-year in July. This was the slowest pace since November last year, though it far exceeded the Bank of Japan's 2% inflation target and reaffirmed market bets for an imminent interest rate hike by the end of this year.
  • A separate government report showed that Japan's household spending in July rose 1.4% from a year earlier, falling short of the median market forecast for a 2.3% rise. On a seasonally adjusted, month-on-month basis, spending increased 1.7%, versus an estimated 1.3% rise. Adding to this, the trade optimism provides a modest lift to the Japanese Yen during the Asian session.
  • US President Donald Trump signed an executive order on Thursday formalizing the lower tariffs on Japanese automobile imports, from the current 27.5% to 15%, and other products that were announced in July. The changes will take effect in seven days of being published in the Federal Register and removes a major uncertainty, which, in turn, boosts investors' confidence.
  • The US Dollar continues with its struggle to attract any meaningful buyers amid the growing acceptance that the US Federal Reserve will lower borrowing costs later this month. Moreover, traders are pricing in a greater chance of at least two 25-basis-point rate cuts by the end of this year. This turns out to be another factor exerting pressure on the USD/JPY pair.
  • Investors now look forward to the release of the closely-watched US monthly employment details, due later during the North American session. The popularly known Nonfarm Payrolls report will play a key role in influencing expectations about the Fed's rate-cut path, which, in turn, will drive the USD and determine the near-term trajectory for the USD/JPY pair.

USD/JPY could accelerate the decline once the 148.00 handle is broken decisively

From a technical perspective, the back to back failures near the 200-day Simple Moving Average (SMA) over the past two days and the subsequent slide favor the USD/JPY bears. However, slightly positive oscillators on the daily chart make it prudent to wait for some follow-through selling and acceptance below the 148.00 mark before positioning for further losses. Spot prices might then accelerate the fall to the 147.40 intermediate support en route to the 147.00 mark and the 146.70 horizontal zone. A convincing break below the latter would expose the August swing low, around the 146.20 region, before spot prices eventually drop to the 146.00 mark.

On the flip side, the 200-day SMA, currently pegged near the 148.75-148.80 region, might continue to act as an immediate hurdle ahead of the 1.4900 mark and the 149.20 area, or a one-month high touched earlier this week. The latter represents the 61.8% Fibonacci retracement level of the downfall from the August monthly swing high, which, if cleared decisively, would shift the bias in favor of bullish traders. The USD/JPY pair might then aim to reclaim the 150.00 psychological mark and extend the momentum further towards challenging the August monthly swing high, around the 151.00 neighborhood.

Economic Indicator

Labor Cash Earnings (YoY)

This indicator, released by the Ministry of Health, Labor and Welfare, shows the average income, before taxes, per regular employee. It includes overtime pay and bonuses but it doesn't take into account earnings from holding financial assets nor capital gains. Higher income puts upward pressures on consumption, and is inflationary for the Japanese economy. Generally, a higher-than-expected reading is bullish for the Japanese Yen (JPY), while a below-the-market consensus result is bearish.

Read more.

Last release: Thu Sep 04, 2025 23:30

Frequency: Monthly

Actual: 4.1%

Consensus: 3%

Previous: 2.5%

Source: Ministry of Economy, Trade and Industry of Japan


Date

Created

 : 2025.09.05

Update

Last updated

 : 2025.09.05

Related articles


Show more

FXStreet

Financial media

arrow
FXStreet

FXStreet is a forex information website, delivering market analysis and news articles 24/7.
It features a number of articles contributed by well-known analysts, in addition to the ones by its editorial team.
Founded in 2000 by Francesc Riverola, a Spanish economist, it has grown to become a world-renowned information website.

Was this article helpful?

We hope you find this article useful. Any comments or suggestions will be greatly appreciated.  
We are also looking for writers with extensive experience in forex and crypto to join us.

please contact us at [email protected].

Thank you for your feedback.
Thank you for your feedback.

Most viewed

EUR/CAD edges higher above 1.6100 ahead of Canadian employment data

The EUR/CAD pair extends its winning streak for the third trading day on Friday, and trades marginally higher to near 1.6115 during the late Asian trading session. The pair ticks up ahead of the Canadian labor market data for August, which will be published at 12:30 GMT.
New
update2025.09.05 14:32

AUD/JPY Price Forecast: Keep bullish vibe above 96.50

The AUD/JPY cross trades with mild losses near 96.75 during the early European session on Friday. The Japanese Yen (JPY) strengthens against the Australian Dollar (AUD) after US President Donald Trump signed an executive order on Thursday to lower Japanese auto import tariffs.
New
update2025.09.05 14:28

Nonfarm Payrolls set to rise by 75K in August amid US labor market concerns

The United States (US) Bureau of Labor Statistics (BLS) will release the critical Nonfarm Payrolls (NFP) data for August on Friday at 12:30 GMT.
New
update2025.09.05 14:00

EUR/JPY holds steady around 173.00, remains below one-month low ahead of Eurozone GDP

The EUR/JPY cross edges higher during the Asian session on Friday, though it lacks follow-through buying and remains below a one-month high touched earlier this week.
New
update2025.09.05 13:56

USD/CHF holds losses near 0.8050 amid rising Fed rate cut bets, US NFP eyed

USD/CHF retraces its recent gains from the previous session, trading around 0.8050 during the Asian hours on Friday.
New
update2025.09.05 13:52

USD/INR edges up at open ahead of US NFP data

The Indian Rupee (INR) ticks down at open against the US Dollar (USD) on Friday. Broadly, the USD/INR pair trades sideways above 88.00 after posting a fresh all-time high earlier this week.
New
update2025.09.05 13:51

India Gold price today: Gold rises, according to FXStreet data

Gold prices rose in India on Friday, according to data compiled by FXStreet.
New
update2025.09.05 13:39

Silver Price Forecast: XAG/USD attracts some buyers to near $41.00 as US NFP data looms

The Silver price (XAG/USD) attracts some buyers near $40.85 during the Asian trading hours on Friday, bolstered by the weaker US Dollar (USD). The white metal receives support from the prospect of the US Federal Reserve (Fed) rate cut this year.
New
update2025.09.05 13:28

When are the UK Retail Sales and how could they affect GBP/USD?

The UK Retail Sales, scheduled to be published later this session at 0600 GMT, are expected to have registered a growth of 0.2% in July, compared to a 0.9% increase seen in the previous month.
New
update2025.09.05 13:03

Gold edges higher as Fed rate cut bets undermine USD ahead of NFP data

Gold (XAU/USD) edges higher during the Asian session on Friday and looks to build on the overnight bounce from the vicinity of the $3,500 psychological mark.
New
update2025.09.05 12:51

Disclaimer:arw

All information and content provided on this website is provided for informational purposes only and is not intended to solicit any investment. Although all efforts are made in order to ensure that the information is correct, no guarantee is provided for the accuracy of any content on this website. Any decision made shall be the responsibility of the investor and Myforex does not take any responsibility whatsoever regarding the use of any information provided herein.

The content provided on this website belongs to Myforex and, where stated, the relevant licensors. All rights are reserved by Myforex and the relevant licensors, and no content of this website, whether in full or in part, shall be copied or displayed elsewhere without the explicit written permission of the relevant copyright holder. If you wish to use any part of the content provided on this website, please ensure that you contact Myforex.

  • Facebook
  • Twitter
  • LINE

Myforex uses cookies to improve the convenience and functionality of this website. This website may include cookies not only by us but also by third parties (advertisers, log analysts, etc.) for the purpose of tracking the activities of users. Cookie policy

I agree
share
Share
Cancel