Japan’s second-quarter GDP growth slowed to 0.3%, below the expected 0.5%, weakening the Yen and BoJ tightening bets.
The Japanese Yen retreated below 159.00 against the US Dollar after Japan’s second-quarter GDP growth fell short of expectations. The economy expanded by 0.3% quarter-over-quarter, missing the 0.5% forecast, while annual growth decelerated to 1.1% from 1.8% previously.
Analysts noted weak domestic demand, with private consumption flat and non-residential investment detracting 0.2 percentage points from growth. The data raised concerns over Japan’s fiscal outlook and debt dynamics, as 10-year JGB yields approach nominal GDP growth levels.
The US Dollar remained subdued as markets priced in a more dovish Federal Reserve stance following recent economic data. The contrast in growth outlooks weighed on the Yen, despite its earlier marginal gains.