US Initial Jobless Claims climbed to 200,000 against expectations of 212,000. Our economy is doing really, really well, showing extraordinary growth. As expected, we had an annualized growth rate of 4.4% in the third quarter, up from 3.8% in the second quarter. Recent jobless claims have shown that the labor market continues to be tight. At the same time, the Japanese Yen (JPY) is continuing its extraordinary rally against the US Dollar (USD).
The Japanese Yen had a serious comeback, turning out to be the strongest currency versus the US Dollar. Sentiment against the Yen is increasingly fragile given fiscal worries continuing to flare in Japan. In the midst of all these uncertainties, the Yen was moving 0.03% stronger against the USD. At the same time, it lost 0.48% against the Euro and 0.53% against the British Pound.
With the global economic picture shifting, Japan’s National Consumer Price Index (CPI) data is due out this Friday, September 28. Analysts are very much on tenterhooks for this report. Additionally, from Japan, they predict that the Bank of Japan will maintain its interest rate at 0.75%. The ruling will be critical, particularly given the entrenched fiscal realities that sit at Japan’s doorstep.
What’s happened to the US economy, particularly its recent strength, makes for a fascinating backdrop to these developments. The advance estimate of third-quarter growth came in at 4.9%, beating predictions of 4.3%, signaling a quicker-than-expected rebound from the pandemic. As this data emerges, it adds complexity to the dynamics between the US Dollar and other currencies, including the Yen.
In Japan, calls for a potential snap election are growing louder. If it does, it would open the door for even more government spending on Prime Minister Takaichi’s pro-stimulus agenda. While such measures, if adopted, would bring much-needed short-term relief, they would heighten worries about Japan’s soon-to-be-excessive public debt burden. Striking this delicate balance between inertia and stimulus growth will be critical to investors and policymakers moving forward.