The Japanese yen rose in Asian trade against a basket of major rivals, extending gains for the second session against the US dollar and moving away from two-month lows after Japanese wages data.

Real Japanese wages are increasing, while household spending beat expectations, which paves the way for accelerated inflation in the months to come.

The Price

The USD/JPY pair fell 0.45% today to 147.51 yen per dollar, with a session-high at 148.19.

The yen rose 0.3% against the US dollar yesterday, marking the first profit in four days, and moving away from two-month lows at 149.12.

Japanese Wages

The Japanese Labor Ministry said that total wages rose 3% y/y in August, matching expectations. 

Real wages, excluding inflation, rose 2% in August, marking the second increase in a row.

Higher wages would naturally increase inflationary pressures on the Bank of Japan’s policymakers, which bolsters the case for a third Japanese interest rate hike this year.

Household Spending

Earlier data also showed Japanese household spending fell 1.9% y/y in August, better than the 2.5% decrease estimated by analysts.

The dollar index stabilized against most major rivals today as investors await important US inflation data and the Fed’s latest meeting minutes this week.

Minneapolis Fed President Neil Kashkari said that risks facing the US economy turned from inflation to potentially higher unemployment, which requires boosting the labor sector. 

According to the Fedwatch tool, the odds of a 0.5% Fed interest rate cut at the November meeting were eliminated, with a 86.6% chance of a 0.25% rate cut, and a 13.4% chance of no change in interest rates.

US 10-year treasury yields also rose above 4% for the first time since August, while oil prices rose 2% to $80 a barrel amid mounting Middle East tensions.

Later this week, the Federal Reserve will release the minutes of the latest policy meeting, while corporations will start reporting their quarter financial results this week.

The dollar index was little changed at 102.5 as of 19:47 GMT, with a session-high at 102.6, and a low at 102.3.

Aussie

The Australian dollar fell 0.5% against its US counterpart as of 20:02 GMT to 0.6756.

Loonie

The Canadian dollar fell 0.4% against its US counterpart to 0.7340.

Gold prices lost ground on Monday as the dollar stabilized against most major rivals while US treasury yields gained ground.

Minneapolis Fed President Neil Kashkari said that risks facing the US economy turned from inflation to potentially higher unemployment, which requires boosting the labor sector. 

According to the Fedwatch tool, the odds of a 0.5% Fed interest rate cut at the November meeting were eliminated, with a 86.6% chance of a 0.25% rate cut, and a 13.4% chance of no change in interest rates.

US 10-year treasury yields also rose above 4% for the first time since August, while oil prices rose 2% to $80 a barrel amid mounting Middle East tensions.

Later this week, the Federal Reserve will release the minutes of the latest policy meeting, while corporations will start reporting their quarter financial results this week.

Otherwise, the dollar index was little changed at 102.5 as of 19:47 GMT, with a session-high at 102.6, and a low at 102.3.

Gold spot prices fell 0.2% to $2662 an ounce as of 19:48 GMT.

The US dollar rose in European trade on Monday against a basket of major rivals, maintaining the gains for the sixth straight session and about to mark seven-week highs amid strong demand on the greenback following upbeat US employment data.

The data renewed pressures on the Federal Reserve’s policymakers, which reduced the odds of a 0.5% interest rate cut in November.

The Price 

The dollar index rose 0.15% today to 102.62, with a session-low at 102.42.

The index closed up 0.55% on Friday, the fifth profit in a row, marking seven-week highs at 102.69 after stellar US labor data.

The index also rose 2.1% last week, marking the first profit in five weeks, and the largest since September 2022.

US Labor Data

The US economy added 254 thousand new jobs last month, surpassing estimates of a 147K increase. 

Unemployment fell to 4.1% in September, beating estimates of 4.2%, while average wages rose 0.4% in September, beating estimates of 0.3%.

According to the Fedwatch tool, the odds of a 0.5% Fed rate cut in November tumbled from 33% to 3%, with the odds of a 0.25% rate cut surging to 97%.

Now investors await crucial US inflation data for September to gauge the path ahead for US interest rates.