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USD/JPY Outlook After the Weak Japan GDP Data

USD/JPY Outlook After the Weak Japan GDP Data

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The USD/JPY price moved sideways on Monday as the market reflected on the relatively weak Japanese GDP numbers and the upcoming FOMC minutes. The pair dropped to a low of 133.08, which was lower than last month’s high of 139.37.

Japan GDP and FOMC minutes

The USD/JPY price declined slightly as investors reflected on the latest Japan GDP data. The numbers revealed that the economy grew by 0.5% in the second quarter. This increase was lower than the median estimate of 0.6%. It led to a year-on-year growth of 2.2%, which was lower than the median estimate of 2.5%. 

Private consumption, which is an important part of the economy, rose by 1.1% in the second quarter. Capital expenditure rose by 1.4% while external demand rose from -0.4% to 0.0%. 

These numbersimply that the Bank of Japan (BoJ) will likely continue easing in a bid to support the economy. Unlike many central banks, the BoJ has maintained interest rates low and continued with its quantitative easing (QE) policies. 

The USD/JPY price will next react to the upcoming US retail sales and FOMC minutes. The retail sales numbers, which will come out on Wednesday, are expected to show that sales dropped sharply in July as consumer inflation rose. Data published last week showed that the US inflation dropped to 8.7% in July. 

The Federal Reserve will deliver minutes of the July meeting on Wednesday. These minutes will provide more color about the deliberations that happened in that meeting. The bank decided to hike interest rates by another 0.75% in July, bringing the total to 225 basis points. 

USD/JPY forecast


The four-hour chart shows that the USD to JPY exchange rate moved sideways on Monday after the latest Japan GDP data. It was trading at 133.08, which was lower than this year’s high of 139.37. 

The pair has moved below the 25-day and 50-day moving averages while the Relative Strength Index (RSI) has moved to the neutral point at 40. Therefore, the pair will likely remain in this range as traders wait for the upcoming FOMC minutes.

Crispus Nyaga
Crispus Nyaga
Crispus is a financial analyst with over 9 years in the industry. He covers the stock market, forex, equities, and commodities for some of the leading brands. He is also a passionate trader who operates his family account. Crispus lives in Nairobi with his wife and son.