Yen under pressure on softer household spending

The US dollar is giving away previous gains against the Japanese yen on Friday, approaching weekly lows near 152.85, after being rejected at the 153.50 area earlier in the day. The USDJPY pair is looking for direction in choppy markets amid a risk-averse mood and with all eyes on the US Michigan Consumer Sentiment Index report.

The yen depreciated during Asian trading, hit by softer than expected household spending data, which grew at a 1.8% year-on-year pace in September, missing expectations of an acceleration to 2.5%, following August’s 2.3% increase.

These figures support PM Sanae Takaichi, who said earlier in the week that the Japanese economy is only halfway through the path to achieve sustainable and stable price growth. These comments put the Bank of Japan’s plans to hike interest rates in December into question, and add pressure on the yen.

The pair is on track for a 0.6% weekly loss, weighed by mixed US employment data and some verbal interventions from Japanese Finance Minister Katayama, who warned about excessive currency volatility earlier in the week, as the JPY dropped to levels that triggered interventions in 2022 and 2024.

In the US, comments by Federal Reserve vice-chair Philip Jefferson will grab some attention after the downbeat jobs data seen on Thursday, although the highlight of the day is the Michigan Consumer Sentiment Index, which is expected to have deteriorated for the fourth consecutive month in November.

(Source: OANDA)