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10/06/24
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JPY Flat as GDP Comes in As Expected
On Monday, the Japanese yen was flat and USD/JPY traded at about 156.91, up 0.09% for the day in the North American session.
The Japanese economy contracted in Q1 with a weak reading of -1.8% y/y, after Q4 2023’s revised 0.4% gain. This was slightly higher than the -1.9% market estimate and the -2.0% initial estimate.
GDP declined by 0.5% on a quarterly basis, as was expected. This came after the fourth quarter’s small gain of 0.1%. The weak GDP data came after last week’s soft household spending release, which showed a drop of 1.2% m/m in April.
The Bank of Japan’s next meeting will be on June 14, and it is not expected it will hike interest rates, after March’s historic rate hike. This was the first rate hike since 2007 and a clear move away from the ultra-loose monetary policy held by the BoJ.
It is expected that the BoJ may discuss reducing its purchasing of Japanese government bonds in an attempt to unwind monetary policy to shore up the weak Japanese yen.
The US nonfarm payroll report on Friday was stronger than expected and boosted the US dollar against all other major currencies, including the yen.
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