Yen exchange rate today
According to Lao Dong, on July 7, the Japanese Yen (JPY) was suddenly under strong selling pressure, with the USD/JPY pair remaining above the psychological mark of 145, in the context of the US Dollar (USD) strengthening widely. Meanwhile, last week, the Yen closed the trading session at a slight increase, with a forecast of a positive situation for this currency in the coming time.
Investors are concerned about global trade tensions as new US tariffs could hinder the Bank of Japan's (BoJ) interest rate normalization plan, causing the Yen to be sold in the session.
Actual salary decreases, Japanese Yen is unlikely to increase
According to FXStreet, newly released data shows that real wages in Japan fell for the fifth consecutive month in May, with the fastest decline in nearly two years, raising concerns about spending by Japanese consumers.
Specifically, Japan's nominative wages have increased by only 1% over the same period, the weakest level since March 2024, while special bonuses have decreased sharply by nearly 19%. Real estate inflationally adjusted fell 2.9% year-on-year, the biggest decline in 20 months, while consumer inflation remained strong at 4% in May.
The stagnant real income situation could hinder consumer spending, threaten Japan's economic recovery, and make it difficult for the BoJ to continue raising interest rates. However, the market still expects the BoJ to increase interest rates once more, helping the Yen avoid strong selling pressure.
On the other hand, the US dollar, despite its strength, still struggles to recover strongly from its multi-year low due to expectations that the US Federal Reserve (Fed) will cut interest rates. Traders are now pricing in a 70% chance of a rate cut in September, with at least two cuts this year.
In terms of geopolitics, Israel's airstrike on three ports in Yemen on Monday morning increased tensions in the Middle East, creating conditions for safe-haven capital to reach the Yen. However, concerns about unpredictable US tax policies and inflation in Japan are still dominating investor sentiment.
This week, the market will focus on the minutes of the FOMC meeting released on Wednesday to find clues on the Fed's interest rate cut roadmap, which could have a strong impact on the USD/JPY pair's short-term movements.
