The Japanese yen continues to show little movement this week. In Tuesday’s North American session, USD/JPY is trading at 109.28, up 0.17% on the day. On the release front, Japanese Household Spending disappointed with a decline of 0.2%. This was well short of the forecast of a 1.2% gain. The US will release JOLTS Job Openings, which is expected to dip to 6.02 million. All eyes are on US President Trump, who will announce if he is pulling the United States out of the Iran nuclear agreement. On Wednesday, the US releases PPI reports and Japan publishes the current account surplus. As well, the Bank of Japan releases the summary of opinion from the April policy meeting.
Japanese consumer spending was dismal in March, according to a key indicator. Household Spending declined 0.2%, underscoring sluggish domestic demand and a pessimistic Japanese consumer. Although the employment market is very tight, consumers continue to hold tight to the purse strings, as companies have been reluctant to raise wages. However, Bank of Japan policymakers appear more confident in the Japanese economy, as the minutes from the March meeting were upbeat. The minutes said that the economy, as well as inflation, are likely to continue on an upward trend. The bank has long sought to reach an inflation target of around 2 percent, and if policymakers are correct and this goal is on its way to being achieved, the BoJ will be able to contemplate a reduction in its stimulus program, a move which could have a substantial impact on the yen. However, the cautious BoJ is likely to stick to current policy well into 2019, even if economic conditions improve and inflation moves closer to target.
