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Yen slips back below 159 against dollar after weak Japan GDP

Japanese GDP growth slowed to 0.3% in the second quarter versus expectations of 0.5%, while traders cut odds of a Fed September hike to 30% from above 50% a week earlier.

Reported · Written up by our desk · Major Pairs

The Japanese yen edged higher versus the US dollar on Wednesday, but the USD/JPY pair moved back above 159.00 after falling to about 158.85 earlier in the European session, according to FXStreet.

Weaker-than-expected Japanese GDP data increased doubts about the Bank of Japan’s plans to tighten policy, pressuring the yen. Growth slowed to a 0.3% pace in the second quarter compared with a 0.5% forecast, and yearly GDP growth decelerated to 1.1% year over year from 1.8% the prior quarter.

At the same time, the dollar stayed under pressure as investors reassessed the Fed’s near-term tightening chances after recent US data. FXStreet cited that retail sales fell 0.6% in July versus expectations for a 0.1% increase, and it noted that producer and consumer prices showed easing inflationary pressures, with nonfarm payrolls showing net employment fell unexpectedly in July.

The article said traders lowered their bets for a September rate hike to 30% from above 50% one week earlier, using data from the CME Group’s FedWatch Tool, which has weighed on speculative demand for the dollar.

Latest closeUSD/JPY 159.31 ▼0.1%

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