That was the magic number put forward by Rengo, Japan’s largest union group, coming into this year’s spring wage negotiations. It was an ambitious one but at least it helped to deliver yet another strong average wage hike at the end of the day. It’s the second year running now that Japan has seen an average wage hike above 5% at least. But given the backdrop, yen bulls were certainly hoping for better.

The narrative coming into March was that the BOJ is going to use the results of the spring wage negotiations as a crucial base to build their case for the next rate hike. If the numbers delivered as anticipated, traders were even considering a potential rate hike in May next.

But with this news here, it looks like that might be off the table.

All that being said, the 5.46% wage hike in the first-round is nothing terrible nor does it derail the BOJ’s objective. And so the question now is how does the BOJ want to use that to fit their agenda?

As always, sometimes it’s not what the markets think that matters most but it is how central banks want to spin the story. And as traders, we can only read the tea leaves and listen.

At first glance, this shouldn’t compel the BOJ to hastily chase the next rate hike. But I would be remiss to not warn about the possibility that they might just not care and stick with the idea of putting a positive spin on the results of the spring wage negotiations.

In any case, USD/JPY is now up to around 149.00 on the day but it’s tough to see this translate to much heavier gains given the current BOJ pricing; at least not on its own.