The dollar staged a V-shaped reversal against the yen as hawkish positions squaring and wage data were suboptimal

Daocheng Technology Financial News - Thursday (May 9)USD/JPYA short-term sharp decline reached a low of 155.18, and then quickly pulled back to 155.69. A summary of the meeting's opinions showed that the board members of the Bank of Japan turned overwhelmingly hawkish at their policy meeting in April, with many calling for steady interest rate hikes to prevent the risk of inflation overshooting. And Masashi Kanda, finance minister of Japan, said that intervention in the foreign exchange market can be usedforeign exchange reservesThere are no restrictions.

But real inflation-adjusted wages fell 2.5 per cent in March from a year earlier, the second straight year of declines, continuing to weigh on the yen.

Daocheng Technology analyst Bob Mason said USD/JPY is above the 50- and 200-day moving averages, confirming a bullish price trend. A break above the 156 mark could support a move towards the 158 level, which could send bulls rushing towards the April 29 high of 160.209.

(Dollar/Japanese Yen 5-minute chart)

Meeting notes reflect BoJ's shift to an overwhelmingly hawkish stance

According to a summary released on Thursday, one member said the BoJ should consider modest rate rises to avoid being forced to raise rates in a "discontinuous and rapid" manner once the price target is sustainably met.

"The BoJ must raise interest rates in a timely and appropriate manner as the likelihood of achieving growth and price projections increases," another opinion said.

At its April meeting, the Bank of Japan kept interest rates near zero and released a new quarterly forecast that expects inflation to remain near 2 percent in early 2017, indicating that the central bank is ready to raise borrowing costs later this year.

According to the summary, one board member believes that interest rates could rise faster than expected. "If the outlook in our April quarterly report is met, our 2 per cent inflation target will be consistently and steadily achieved for about two years, and the output gap will be positive. Therefore, our policy rate is likely to be higher than expected."

The member said "the current path has been priced by the market".

The debate highlights recent comments by Kazuo Ueda, governor of the Bank of Japan, suggesting multiple interest rate hikes are possible and increasing the likelihood that short-term borrowing costs will rise in the coming months.

Japan's Ministry of Finance Finance Treasurer Shinzo Kanda: There is no limit to the foreign exchange reserves that can be used to intervene in the foreign exchange market

Makoto Kanda, Japan's finance ministry treasurer, said on Thursday that comments about Japan's limited foreign exchange reserves for currency intervention were "completely wrong" and again warned Tokyo to be ready for action.

Asked about TV Tokyo quoting a government official as saying the government had intervened, Mr. Kanda said the government would not comment on whether it had intervened.

The Japanese government is suspected of intervening in at least two days last week to prop up the yen after it fell to a more than 30-year low.

Japan's real wages fell for two consecutive years in March, and overtime wages fell for four consecutive months

Inflation-adjusted real wages fell 2.5 per cent in March from a year earlier, the second straight year of declines, according to data released on Thursday by Japan's health ministry.

The data showed that the pace of decline in real wages accelerated from the 1.8% decline in the previous month as the cost of living rose faster than nominal wage growth.

Early signs point to a virtuous cycle of rising wages and inflation in Japan, but workers' incomes still lag behind rising costs, highlighting the challenges policymakers face in pushing companies to raise wages.

Some analysts said they expect real wages to turn to growth sometime in the 2024/25 fiscal year.

In March, nominal wages rose 0.6 percent to 301,193 yen ($1,940.30), a slowdown from the 1.4 percent increase in February.

On the other hand, consumer prices rose 3.1% year-on-year in March, moderating slightly from 3.3% in February and still above the Bank of Japan's 2% inflation target.

Recurring pay rose 1.7 per cent, while overtime pay fell 1.5 per cent, the fourth straight monthly decline. Special bonuses, including bonuses, fell 9.4 per cent in March from a year earlier. In this year's annual labour negotiations, large Japanese companies offered to raise wages by more than 5 per cent, the biggest increase in about 30 years.

But small businesses, which employ 70% of workers, are lagging behind, hindering wage growth. Low-wage informal workers also make up about 40% of the workforce.

Weak wage growth has dashed policymakers' hopes of healthy economic growth led by persistent inflation and sound pay, which are considered prerequisites for normalizing monetary policy

Weakness in average cash income and a more pronounced decline in overtime pay are likely to attract the attention of the Bank of Japan. Slower wage growth could reduce disposable income and affect household spending. The downward trend in household spending could dampen demand-driven inflationary pressures and put the Bank of Japan on hold.

Follow the change in the number of initial jobless claims in the United States within the day

Initial jobless claims and comments from the Federal Reserve will be worth investors' attention later on Thursday, with economists predicting jobless claims will rise from 208,000 to 210,000 in the week to May 4.

A larger-than-expected increase in initial jobless claims could fuel investor expectations of a September rate cut by the Federal Reserve, and weaker labour market conditions could weigh on wages and reduce disposable income. The downward trend in disposable income could force consumers to rein in spending, thereby dampening demand-driven inflation. Falling inflationary pressures could prompt the Fed to consider a rate cut.

Aside from the data, the Federal Reserve will remain the focus. FOMC member Mary Daly will speak on the calendar. As a voting member of the committee, views on inflation, the economic outlook and the timing of interest rate cuts could influence the situation.

In the short-term outlook, the near-term trend of USD/JPY depends on Japanese household spending data and Fed rhetoric. Weaker-than-expected trends in household spending could affect the Bank of Japan's hopes of raising interest rates. In contrast, Fed speakers remain concerned about US inflation and the monetary policy divide is skewed towards the dollar. However, investors should monitor the threat of intervention.

Beijing time 10:01, the dollar against the yen is now 155.54/55.