JPY is vigorous. Overview for 10.01.2023

The Japanese yen against the US dollar remains strong. The current quote is 131.73.

This morning, Japan has presented important statistics. Household spending in November turned out below forecasts, falling by 1.2% y/y. The forecast had suggested growth by 0.5%. This is a leading indicator of economic activity; hence, fundamentally speaking, this is bad news.

These statistics means that people abstain from spending money again because they do not trust the economic situation. In such circumstances, any intervention effort of the Bank of Japan will be meaningless.

Last month, inflation in Tokyo dropped by 4% y/y, never living up to expectations. The base CPI in Tokyo in December coincided with the forecast – 2.7% y/y. These are also signals for a relative slow-down of the inflation rally. Again, this is not the best of the news.

For now, the yen is supported by constant colossal money injections from the BoJ. However, they will come to an end sooner or later, and the spring will open.