USD/JPY holds steady as Japan wage data disappoints – BBH

USD/JPY is range bound around 147.60, BBH FX analysts report.  

Weak wage growth limits BoJ hike prospects

"Japan wage growth rise less than expected in June. Nominal cash earnings printed at 2.5% y/y (consensus:  3.1%) vs. 1.4% in May reflecting the outcome of this year's annual spring labor-management wage negotiations. The less volatile scheduled pay growth for full-time workers unexpectedly slowed to 2.3% y/y (consensus: 2.5%) vs. 2.4% in May."

"Overall, Japan wage growth is not a source of significant inflation pressures given annual total factor productivity growth of about 0.7%."

"The Bank of Japan is unlikely to raise the policy rate by more than is currently priced-in, limiting JPY upside. The swaps market imply 65% odds of a 25bps rate hike by year-end and a total of 50bps of rate increases to 1.00% over the next two years. We expect USD/JPY to remain within a wide 142.00-150.00 range over the next few months."