USD/JPY ignores sluggish yields to rise past 143.00 as softer Japan real wages defend BoJ doves

• USD/JPY refreshes intraday high while extending week-start rebound.
• Japan’s real wages dropped for the 15^th month in June even as nominal wages rose past market forecasts.
• BoJ Summary of Opinions appeared mixed; yields also struggle amid lackluster session.
• US Dollar remains firmer despite unclear Fed talks ahead of US inflation.

USD/JPY remains on the front foot for the second consecutive day as it takes the bids to refresh intraday high near 143.40 during early Tuesday. In doing so, the Yen pair justifies the market’s latest dovish concerns about the Bank of Japan (BoJ), backed by downbeat Japan real wage data for June. With this, the risk-barometer pair ignores sluggish yields as the US Dollar extends the previous day’s recovery amid cautious optimism in the markets.

Japan’s Labor Cash Earnings came in better-than-forecast for June but the real wages were downbeat enough to defend the dovish bias about the BoJ. That said, Japan’s inflation-adjusted real wages dropped for the 15th consecutive month in June to 1.6% YoY versus 0.9% prior.

On Monday, the Bank of Japan’s (BoJ) Summary of Opinions for the July meeting showed that one member said the achievement of 2% inflation in a sustainable and stable manner seems to have clearly come in sight. The news joins signals of tweaking the Yield Curve Control (YCC) policy with greater care to weigh on the JPY amid the dovish BoJ concerns.

On the other hand, the US Dollar Index (DXY) manages to extend the week-start rebound above 102.00 despite downbeat yields. That said, the US 10-year and two-year Treasury bond yields remain pressured around 4.06% and 4.76% by the press time.

After witnessing unimpressive US jobs report, Fed Governor Michelle Bowman said that additional rate increases will likely be needed to lower inflation back to target. On the contrary, New York Fed President John C. Williams said he expects that interest rates could begin to come down next year. Fed’s Williams also conveyed hopes of witnessing a slightly higher unemployment rate as the economy cooled.

It should be noted that the bearish bias about the Eurozone and China also underpins the US Dollar and propel the USD/JPY pair amid a sluggish session ahead of Chinese and the US trade balance data.

USD/JPY remains on the front foot for the second consecutive day as it takes the bids to refresh intraday high near 143.40 during early Tuesday. In doing so, the Yen pair justifies the market’s latest dovish concerns about the Bank of Japan (BoJ), backed by downbeat Japanese real wage data for June. With this, the risk-barometer pair ignores sluggish yields as the US Dollar extends the previous day’s recovery amid cautious optimism in the markets.

Japan’s Labor Cash Earnings came in better-than-forecast for June but the real wages were downbeat enough to defend the dovish bias about the BoJ. That said, Japan’s inflation-adjusted real wages dropped for the 15th consecutive month in June to 1.6% YoY versus 0.9% prior.

On Monday, the Bank of Japan’s (BoJ) Summary of Opinions for the July meeting showed that one member said the achievement of 2% inflation in a sustainable and stable manner seems to have clearly come in sight. The news joins signals of tweaking the Yield Curve Control (YCC) policy with greater care to weigh on the JPY amid the dovish BoJ concerns.

On the other hand, the US Dollar Index (DXY) manages to extend the week-start rebound above 102.00 despite downbeat yields. That said, the US 10-year and two-year Treasury bond yields remain pressured around 4.06% and 4.76% by the press time.

After witnessing an unimpressive US jobs report, Fed Governor Michelle Bowman said that additional rate increases will likely be needed to lower inflation back to target. On the contrary, New York Fed President John C. Williams said he expects that interest rates could begin to come down next year. Fed’s Williams also conveyed hopes of witnessing a slightly higher unemployment rate as the economy cooled.

It should be noted that the bearish bias about the Eurozone and China also underpins the US Dollar and propel the USD/JPY pair amid a sluggish session ahead of Chinese and the US trade balance data.

Technical analysis

A daily closing beyond the five-week-old descending resistance line, around 143.20 by the press time, becomes necessary for the USD/JPY bulls to keep the reins.