A weaker yen is hurting the confidence of Japanese households and could erode their purchasing power, the government said in a report on Friday, highlighting its concerns about the negative impact of the yen’s depreciation on the economy. Rising inflation expectations helped improve household confidence in 2013, when former Prime Minister Shinzo Abe’s government implemented the “Abenomics” stimulus policy, the government said in an annual white paper analyzing the economy. But since mid-2023, inflation expectations have risen again, dampening household sentiment, partly as the public reacts to media reports of rising food prices and higher import costs due to a weaker yen. “A weaker yen could weaken consumers’ purchasing power” as it pushes up inflation, outstripping wage growth, the paper said. “The yen had been hovering below a low of 38 to 160 against the dollar for much of July, but it rose sharply against the dollar in the days leading up to and following the Bank of Japan’s decision to raise interest rates on Wednesday.The yen traded at 149.07 against the dollar in Asian trading on Friday as investors began to turn their attention to the prospect of steady rate hikes by the Bank of Japan and the Federal Reserve, which is expected to begin a U.S. monetary easing cycle in September. In a white paper prepared ahead of the Bank of Japan’s decision on Wednesday, the government said a weaker yen was no longer boosting exports as it had in the past as more Japanese manufacturers shifted production overseas. Instead, the report said a weaker yen was weighing on profits at small companies by increasing the cost of raw material imports.A weaker yen has become a source of concern for Japanese policymakers because it dampens consumption by raising the cost of imported fuel, food and raw materials. Japanese authorities spent 5.53 trillion yen ($37 billion) in foreign exchange market intervention in July to push the yen from 38 to 160 to the dollar to 40.00 per dollar, official data showed. The Bank of Japan also cited the risk of overshooting inflation due to a weak yen as one of the reasons for its rate hike on Wednesday.

 The number of Americans filing new claims for unemployment benefits fell more than expected last week as disruptions from weather and temporary auto plant shutdowns faded. The Labor Department said Thursday that initial jobless claims fell by 10,000 to a seasonally adjusted 235,000 in the week ended July 20. Economists predict that the number of applicants this week will be 238,000.The previous week, the number of applicants rose to the upper end of the range of 194,000-245,000 due to a surge in applications related to Hurricane Burr in Texas and temporary auto plant shutdowns. Despite the fluctuations, layoffs are still at historically low levels, and the slowdown in the labor market mainly comes from the reduction in employment caused by the Federal Reserve’s aggressive interest rate hikes in 2022 and 2023, which will cool demand.During the week of July 13, the number of people receiving unemployment benefits (the number of people continuing to receive unemployment benefits after initial claims, which can be used as an indicator of employment) fell by a seasonally adjusted 9,000 people to 1,851,000. The claims renewal data covers the period when the government surveyed the unemployment rate in July. The number of people renewing claims did not change much between the June and July survey weeks. As job opportunities declined, the U.S. unemployment rate rose to a 2.5-year high of 4.1% in June.The U.S. Federal Reserve has maintained its benchmark overnight interest rate in a range of 5.25%-5.50% over the past year. Since 2022, it has raised interest rates by a cumulative 525 basis points to curb inflation. Financial markets expect the Federal Reserve to cut interest rates in September and again in November and December. Another report from the Commerce Department’s Census Bureau showed that non-defense capital goods orders excluding aircraft orders, one of the important indicators of corporate investment plans, rebounded 1.0% in June after falling 0.9% in May.

 Russia’s central bank will raise key interest rates by 200 basis points to 18% at a board meeting on July 26 in an effort to curb inflation and cool an overheating economy. Massive state spending, wage growth across sectors, severe labor shortages and continued growth in business and retail lending are the main factors behind inflation, which currently stands at 9.2%, well above the regulator’s 4% target.Analysts agree that a rate hike is inevitable, with three-quarters of those polled expecting a 200 basis point hike. Only a handful of analysts see a 100 basis point rise as possible.Opponents of the central bank, including industry lobbyists and bankers, accuse it of stifling economic growth at a time when the economy can grow at a faster rate than the current 5%, fueled by defense-sector spending. The Fed’s rhetoric has become tougher, with its governor, Elvira Nabiullina, saying the board will focus on the size of the rate hike rather than the need for it. The central bank said earlier that tightening monetary policy would last much longer than previously expected in order to curb inflation in a more sustainable way.Regulators are also expected to review inflation forecasts for this year, currently at 4.3-4.8%. Some analysts pointed out that the inflation rate is currently at a peak of more than 9% and will slow to 7% by the end of the year.