Japanese Yen Forecast: USD/JPY Eyes 150 as BoJ Awaits Household Spending Data

Will Household Spending and Wages Stir the BoJ Hawks?

On Tuesday, October 8, household spending and wages will be key areas of focus for the USD/JPY and the Bank of Japan.

Economists expect household spending to increase by 0.5% in August after sliding by 1.7% in July. A rebound from July’s pullback in household spending could fuel demand-driven inflation, possibly raising bets on a Q4 2024 BoJ rate hike.

Average earnings are also crucial to the outlook for household spending and the BoJ. Economists forecast average cash earnings to increase by 3.1% year-on-year in August, down from 3.6% in July.

While an uptick in household spending could signal a more hawkish BoJ rate path, softer wage growth may indicate a near-term pullback in spending. The BoJ could further dampen expectations of a Q4 2024 rate hike if wages rise less than expected.

A modest increase in household spending and softer wages could push the USD/JPY toward 150.

BoJ and Interest Rates

Recent comments from the Bank of Japan have tempered bets on a Q4 2024 BoJ rate hike. On October 3, BoJ board member Noguchi reportedly said,

“I personally feel we need to proceed very carefully in adjusting our degree of monetary support.”

Similar comments from other BoJ Board Members could further dampen demand for the Japanese Yen. Japan’s new prime minister, Shigeru Ishiba, recently added uncertainty to the Bank of Japan’s policy outlook, stating that the country was not ready for further rate hikes.

Overview of the US Economic Calendar: Key Indices and Fed Commentary

Later in the Tuesday session, the RCM/TIPP Economic Optimism Index could impact US dollar demand. Economists predict the Index will increase from 46.1 in September to 47.2 in October. A higher-than-expected reading could bolster expectations of a resilient US economy, reducing bets on a recession.

Stronger consumer sentiment toward the US economy could lead to increased consumer spending. Upward trends in consumer spending may push consumer prices higher, possibly dampening bets on multiple Q4 2024 Fed rate cuts.

Better-than-expected data may signal a USD/JPY move closer to 150.

Additionally, FOMC member speeches could also move the dial. Investors should consider reactions to the latest US US Jobs Report and forward guidance on monetary policy.

Short-term Forecast for USD/JPY

USD/JPY trends will likely hinge on Japan’s data, including today’s stats, producer prices (Thurs), the Reuters Tankan Index (Fri), and BoJ commentary. Better-than-expected figures could reignite bets on a Q4 2024 BoJ rate hike. However, the upcoming US CPI Report is crucial. Softer-than-expected US inflation may renew bets on aggressive Fed rate cuts, possibly sending the USD/JPY toward 147.5.

Traders should stay vigilant as monetary policy chatter and Japan’s economic data will impact trading USD/JPY strategies. Monitor real-time data, central bank views, and expert commentary to adjust your trading strategies accordingly. Stay ahead of the market with our expert insights.

USD/JPY Technical Analysis

Daily Chart

The USD/JPY remains above the 50-day EMA while hovering below the 200-day EMA, affirming bullish near-term but bearish longer-term price signals.

A USD/JPY breakout from the 148.529 resistance level would support a move toward the 200-day EMA. Furthermore, a break above the 200-day EMA could give the bulls a run at 150.

Japan’s household spending, wages, and central bank commentary require consideration.

Conversely, a drop below the 147.500 level could give the bears a run at the 50-day EMA and the 145.891 support level.

The 14-day RSI at 62.08 indicates a USD/JPY move to the 200-day EMA before entering overbought territory.