FX.co ★ Yen Firms Up on Safe-Haven Bid

On Friday, the Japanese yen hovered around the 153 mark, maintaining its gains from the previous session. This movement was fueled by a broad risk-off sentiment due to increasing apprehension over inflated AI valuations, which boosted demand for the yen as a safe-haven currency. Additionally, the yen gained further support from a softer U.S. dollar, following indications of a cooling labor market in the United States that heightened anticipations of an imminent interest rate cut by the Federal Reserve.

Within Japan, household spending saw a 1.8% increase in September, which was a slowdown from August's 2.3% growth and below the projected 2.5%. Earlier reports indicated a rise in nominal wages by 1.9% for the same month, up from 1.5% in August. This increase was driven by steady base pay and modest growth in overtime hours. Despite these wage increases, they continued to trail behind inflation, resulting in a 1.4% year-on-year decline in real wages, marking the ninth consecutive month of decrease. Bank of Japan Governor Kazuo Ueda highlighted that the wage outlook for 2026 will play a pivotal role in determining the timeline for resuming policy tightening after the central bank decided to maintain its current monetary stance last week.