FX.co ★ Japanese Yen Slips After Weak Wage Data

On Monday, the Japanese yen weakened, nearing the 145 per dollar mark, as it reversed the gains made in the previous session. This downturn was primarily driven by disappointing wage data, which dampened expectations for further rate hikes by the Bank of Japan. In May, nominal wages increased by only 1% year-on-year, significantly underperforming market forecasts of a 2.4% rise, and continuing a three-month trend of deceleration. Additionally, real wages—a crucial measure of consumer purchasing power—declined by 2.9%, marking the sharpest decrease in nearly two years and sustaining a five-month streak of decline. Despite record pay hikes secured during the spring labor negotiations, these broader wage standings have not yet been echoed across smaller, non-unionized firms, which are slower in implementing changes. Furthermore, the yen faced increased pressure following Prime Minister Shigeru Ishiba's announcement that he would be cautious in trade talks with Washington, as Japan aims to evade US tariffs that could reach up to 35% on its exports.