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    Japan’s yearly household spending in September was lower than expected at 1.8%

    by VT Markets
    /
    Nov 7, 2025
    Japan’s household spending dropped more than expected in September, with a year-on-year increase of just 1.8%, compared to the anticipated 2.5%. This shortfall indicates potential difficulties in consumer behavior in the country. The lower spending growth may reveal that consumers are being more cautious. It seems that current economic conditions are significantly affecting household spending trends.

    Implications of Household Spending Data

    The September 2025 household spending data shows a growth of only 1.8% instead of the expected 2.5%. This highlights a weakness in domestic demand, making it unlikely that the Bank of Japan will tighten monetary policy anytime soon. This suggests the central bank will continue to support the economy. This approach is very different from the U.S. Federal Reserve, which plans to maintain steady rates until 2026 to control inflation currently at 3.1%. This growing difference in interest rates is likely to keep putting pressure on the Japanese Yen. Traders might want to consider buying call options on the USD/JPY pair, expecting it to rise above the 155 level in the coming weeks. A weaker yen benefits Japan’s big export-focused companies. The Nikkei 225 index primarily includes these firms, whose foreign earnings become more valuable when converted to yen. Therefore, it might be a good idea to buy Nikkei 225 call options or futures contracts, as this currency effect often outweighs concerns about the sluggish domestic economy.

    Market Trends and Historical Comparison

    October 2025’s national inflation figures, which came in at just 1.9%, support this view. With inflation not consistently above the Bank of Japan’s 2% target, there is little reason for policymakers to change their strategy. This effectively locks in a lenient monetary policy for the rest of the year. Looking back from late 2025, we see similarities to the market dynamic from 2013 to 2015. At that time, signs of weak domestic growth led to a more accommodating central bank, a declining yen, and a strong bull market in Japanese stocks. We expect a similar trend to unfold through the end of this year. Create your live VT Markets account and start trading now.

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