Forex - Yen gains despite downward revision to wages as Fed views weigh

Investing.com - The yen gained in Asia on Thursday despite data showing a drop in wage levels in April, as investors swung more toward a view that the Federal Reserve will be slow to hike rates.

In Japan, April real average wages were revised down to a drop of 0.1% from a gain of 0.1%.

The data highlights the difficulty of substantial and sustained increase in real wages, the key to reviving consumption and driving economic growth in Japan.

In China May property prices fell 5.7% year-on-year, a slower pace that the 7.1% drop seen in April

USD/JPY changed hands at 123.25, down 0.15, while AUD/USD changed hands at 0.7728, down 0.28%, as the China house data hinted at weak demand for building supplies. EUR/USD traded at 1.1355, up 0.15%.

The latest Federal Reserve policy meeting ended Wednesday with language that more "decisive evidence" is needed before it starts raising interest rates.

Chairwoman Janet Yellen's remarks to reporters after the rate-setting Federal Open Market Committee left the federal funds rate near zero reaffirmed its two conditions for starting to "normalize" rates.

"Further improvement in the labor market" and becoming "reasonably confident" inflation will rise to the 2% target "over the medium term."

Yellen's other message, reinforced by downwardly revised funds rate projections, is that the path of rate hikes after liftoff will be "gradual."

In New Zealand first quarter GDP rose 0.2%, well below the 0.6% quarter-on-quarter gain seen, with the year-on-year pace now 2.6%, below the 3.0% expected.

NZD/USD dropped a sharp 1.30% to 0.6896 after the data, which stoked expectations of another rate cut in the coming quarter.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, eased 0.12% at 94.37.

Overnight, the dollar turned moderately higher against a basket of other major currencies in choppy trade on Wednesday.

Earlier Wednesday, data showed that euro zone consumer price inflation increased by 0.3% last month, in line with expectations and unchanged from a preliminary estimate. Euro zone inflation was flat in April.

Core CPI, which excludes food, energy, alcohol, and tobacco costs rose by 0.9% in May, unchanged from an initial estimate and up from 0.9% in April.

But the euro's gains were held in check as concerns over the approaching deadline for Greece’s repayments to the International Monetary Fund persisted.

Europe wants Greece to make spending cuts worth €2 billion in order to secure a deal that will unlock additional funds before its bailout expires at the end of June and it must repay €1.6 billion to the IMF.

A default by Greece could lead to the country’s exit from the euro area.