The Japanese yen rose in Asian trading on Friday against a basket of major and minor currencies, beginning to recover after two days of losses against the U.S. dollar. The rebound followed the release of strong household spending data in Japan, renewing hopes for solid growth in the world’s third-largest economy.

Household spending surged in May at the fastest pace in nearly three years, boosting optimism for a rebound in domestic consumption, even as U.S. tariffs continue to weigh on sentiment and economic momentum.

The Price

The dollar fell 0.25% against the yen to ¥144.57, down from the day’s opening level of ¥144.91. The session high was ¥144.97.

On Thursday, the yen had lost 0.9% against the dollar, marking its second consecutive daily decline and touching a one-week low of ¥145.23 following stronger-than-expected U.S. employment data.

Jump in Japanese Household Spending

Data released Friday in Tokyo showed household spending in Japan rose by 4.7% year-over-year in May — the fastest increase since August 2022 — well above market expectations of a 1.3% rise. In April, spending had declined 0.1%.

A Ministry of Internal Affairs official attributed the better-than-expected figures to increased outlays on one-off items such as auto-related products and dining out.

The official added that the three-month moving average of household spending has been positive since last December, signaling a recovery in consumption.

Spending and wage trends remain key indicators the Bank of Japan monitors to assess the strength of the economy and to determine the timing of future interest rate hikes.

Strong wage growth is seen as essential to offset surging living costs fueled by inflation.

Japanese companies have agreed to raise wages by 5.25% this year, the biggest annual pay hike in 34 years, according to labor union confederation Rengo on Thursday.

Yutaro Suzuki, an economist at Daiwa Securities, noted that with the yen appreciating and crude oil prices trending lower, real wages are expected to turn positive year-over-year in the second half of 2025 as inflation slows — paving the way for a gradual recovery in consumer spending.

Rate Hike Expectations

Following the data, market pricing for a potential 25-basis-point rate hike by the Bank of Japan at its July meeting rose from 40% to 45%.

Investors now await further data on inflation, unemployment, and wage growth to reassess the likelihood of a rate move.

U.S. stock indices rose on Thursday in a shortened trading session ahead of a holiday break, with both the Nasdaq and S&P 500 closing at new record highs and posting weekly gains.

Data released earlier in the day by the Bureau of Labor Statistics showed the U.S. economy added 147,000 jobs in June, surpassing Dow Jones estimates of 110,000. May’s figure was also revised up to 144,000.

Another government report showed initial jobless claims fell by 4,000 to 233,000 in the week ending June 28 — the lowest since May 17 — defying expectations of a rise to 240,000.

Following the strong employment data, the yield on the 2-year U.S. Treasury — the most sensitive to policy changes — climbed 8.3 basis points to 3.872% by 4:27 p.m. Mecca time. The 10-year yield rose 4.3 basis points to 4.336% after hitting 4.364%, while the 30-year yield added 2.6 basis points to 4.849%.

Meanwhile, data from the Institute for Supply Management (ISM) showed the U.S. services PMI rose to 50.8 in June from 49.9 in May, in line with expectations.

Wall Street will close early today, with U.S. markets shut on Friday for the Independence Day holiday.

At the close, the Dow Jones Industrial Average rose 0.8% (344 points) to 44,828, gaining 2.3% for the week. The index hit an intraday high of 44,886 and a low of 44,550.

The broader S&P 500 rose 0.8% (52 points) to 6,279, up 1.7% for the week, recording a session high of 6,284 and a low of 6,246.

The Nasdaq Composite gained 1% (208 points) to 20,601, with a weekly increase of 1.6%, reaching a high of 20,624 and a low of 20,480.

The dollar rose against most major currencies on Thursday following the release of stronger-than-expected U.S. employment data.

Figures published Thursday by the Bureau of Labor Statistics showed the U.S. economy added around 147,000 jobs in June, surpassing Dow Jones estimates of 110,000. The May figure was also revised upwards to 144,000.

Separate government data showed initial jobless claims in the U.S. fell by 4,000 to 233,000 in the week ending June 28, the lowest since May 17, while expectations had pointed to an increase to 240,000.

Following the strong jobs report, the yield on two-year U.S. Treasury bonds — the most sensitive to changes in monetary policy — climbed by 8.3 basis points to 3.872% as of 4:27 p.m. Mecca time. The yield on the ten-year bond rose by 4.3 basis points to 4.336% after touching 4.364%, while the thirty-year yield increased by 2.6 basis points to 4.849%.

Data released Thursday by the Institute for Supply Management (ISM) showed the services PMI in the U.S. rose to 50.8 in June from 49.9 in May, matching expectations.

Wall Street is set to close early today, with U.S. markets shut Friday for Independence Day.

The U.S. Dollar Index rose by 0.4% to 97.1 points at 6:16 p.m. GMT, hitting a high of 97.4 and a low of 96.6.

Australian Dollar

The Australian dollar fell 0.2% against its U.S. counterpart to 0.6569 as of 7:03 p.m. GMT.

Canadian Dollar

The Canadian dollar rose 0.2% against the U.S. dollar to 0.7371 at 7:03 p.m. GMT.

Oil prices edged lower on Thursday amid growing concerns over weakening global demand and the potential reimposition of U.S. tariffs, just ahead of an expected supply increase from major producers.

Brent crude futures slipped by 21 cents, or 0.3%, to $68.90 per barrel by 12:17 GMT. U.S. West Texas Intermediate (WTI) crude also fell 15 cents, or 0.2%, to $67.30 per barrel.

Both benchmarks had hit their highest levels in a week on Wednesday following Iran’s decision to suspend cooperation with the International Atomic Energy Agency—raising fears that the ongoing standoff over its nuclear program could escalate into a broader conflict.

A preliminary trade deal between the U.S. and Vietnam also supported prices temporarily.

However, market sentiment remained clouded by uncertainty over tariffs. The 90-day freeze on higher U.S. tariffs is set to expire on July 9, while key trade talks with partners such as the EU and Japan have yet to conclude.

In parallel, the OPEC+ alliance of oil producers is widely expected to agree on a supply hike of 411,000 barrels per day during its upcoming policy meeting this weekend.

Adding to the bearish tone, a private survey showed that activity in China’s services sector — the world's top oil importer — grew at its slowest pace in nine months in June, weighed down by weak domestic demand and falling export orders.

Further pressuring prices, U.S. crude inventories unexpectedly rose, stoking concerns over domestic demand in the world’s largest oil consumer.

The U.S. Energy Information Administration (EIA) reported a 3.8 million-barrel increase in crude stocks last week, bringing total inventories to 419 million barrels. Analysts surveyed by Reuters had expected a draw of 1.8 million barrels.

Markets are now awaiting the U.S. nonfarm payrolls report due later on Thursday, which could significantly influence the timing and extent of interest rate cuts by the Federal Reserve in the second half of the year.

Lower interest rates tend to stimulate economic activity, potentially boosting oil demand.