USD/JPY continues to fall as the Japanese yen rally continues. In the European session, USD/JPY is trading at 133.26, down 0.72%.
Yen rises after soft US GDP
Thursday’s US GDP for Q1 was weaker than expected, as the -0.9% reading surprised the markets, which had projected a 0.5% gain. There was plenty of discussion about the soft GDP report, not so much that it underperformed, but rather over the question of whether the US was currently in a recession after two straight quarters of negative growth (GDP fell by 1.6% in the first quarter).
Technically, a recession is widely defined as two consecutive quarters of negative growth. However, strategists in the Biden White House have been in emergency mode trying to spin the GDP release and avoid the “R” word at all costs. Optics are always crucial to politicians, and with mid-term elections in a few months, the Democrats don’t want to see the phrase “US in recession!” plastered in the media and are arguing that there are other methods of defining a recession, which of course, according to them, don’t apply to current economic conditions.
However one chooses to define an economic recession, there’s no arguing that the US economy is closer to a recession after the GDP release, and that may lead to the Federal Reserve easing up on future rate hikes. The markets seem to think that is the case, even though runaway inflation hasn’t gone anywhere. Wall Street is sharply higher, risk appetite has returned and the US dollar finds itself in full retreat.
In Japan, today’s data was mixed. Tokyo Core CPI for June rose to 2.3% YoY, up from 2.1% and above the estimate of 2.2%. Retail sales, however, fell sharply to 1.5% YoY in June, down from 3.7% and shy of the 2.8% estimate. Still, the yen has posted strong gains today as the dollar continues to struggle.
- USD/JPY continues to lose ground and is testing support at 133.53. Below, there is support at 131.50
- There is resistance at 134.81, followed by 136.84
Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at firstname.lastname@example.org. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.