The US dollar rallied against the yen on Friday despite the release of stupendous household spending data for June by Japan’s statistical organization. The unexpectedly robust US non-farm employment change enabled the greenback to strengthen against its peers, including the yen. Overall, the USD/JPY pair rallied from a low of 132.52 to a high of 135.50 in the past 24 hours.
According to Japan’s Statistics Bureau, the country’s household spending grew by 3.50% y-o-y in June, following a 0.50% decline in the prior month and more than double the 1.60% increase anticipated by economists. The figure represents the steepest rise in five months.
The reported growth represents the first annual increase since January 2022 as people started spending on hotel stays, outdoor products, and package tours. In particular, overnight stays surged 4.50% y-o-y and stood higher than the pre-pandemic February 2020 level.
However, as per the published data, consumer spending declined concerning fish and vegetables but rose for transportation. Spending on housing surged 13.20% y-o-y in June, following a contraction of 7.50% in May. Medical care rose by 4% in June, following a 1.20% rise in the earlier month. Clothing grew by 0.20%, following a decline of 12%. Food consumption decreased 1%, while furniture posted a drop of 5.50%. Education spending decreased by 4.70%, while fuel, light & water charges fell by 2.90%.
According to the US Bureau of Labor Statistics, the country’s non-farm payroll employment increased by 528,000 in July, following a rise of 372,000 in June, and more than twice the 250,000 non-farm employment additions anticipated by economists.
Notably, the reported figure exceeds the four-month non-farm payroll employment addition of 388,000. Also, total non-farm employment has grown by 22 million since hitting a low in April 2020 and has rebounded to a pre-pandemic level.
The Bureau of Labor Statistics also stated that the unemployment rate inched down to 3.50% in July, from 3.60% in June. Economists had anticipated the unemployment rate to remain unaltered at 3.60%. Correspondingly, the number of jobless people fell to 5.70 million.
The count of permanent job losers stood at 1.20 million in July, about 129,000 below the February 2020 level.
Likewise, the number of long-term unemployed decreased by 269,000 in July to 1.10 million. Notably, long-term jobless people represented 18.90% of the cumulative unemployed in July.
The labor force participation rate and the employment-population ratio were 62.10% and 60%, respectively, in July, and unaltered from June. The percentage of individuals who teleworked because of the COVID-19 pandemic was 7.10% in July. Leisure and hospitality added 96,000 jobs, while food and drink added 74,000 jobs.
Employment in professional and business services grew by 89,000 in July. Also, the healthcare sector added 47,000 jobs. Government jobs increased by 57,000 in July, but remain below the pre-pandemic February 2020 level by 597,000. Construction jobs rose by 32,000 in July. Manufacturing employment grew by 30,000 in July. Retail added 22,000 jobs.
Overall, the average hourly earnings for employees on private non-farm payrolls grew by $0.15 (or 0.50%) in July to $32.27. This compares with a 0.30% rise in June. Economists did not anticipate any change in June’s reading. Over the last year, average hourly earnings have risen by 5.2%.
The robust economic data from both countries are expected to keep the USD/JPY pair range bound in the short term.
The historical price chart indicates that the USD/JPY pair has bounced off the support at 132.55. The next resistance is anticipated only near 137.40. Additionally, the currency pair is trading above its 50-day moving average while the stochastics oscillator is in the bullish zone. Therefore, we are anticipating the currency pair to remain in an uptrend in the short term.
Disclaimer: Any financial trading analysis offered here is our opinion and is not intended as advice or direction for investors. We cannot guarantee the success of any trades made as a consequence of this article, and we encourage traders to incorporate a strong money management strategy to limit losses when they enter the markets. Please use this article as part of your own research before formulating strategies prior to trading.
