Japan’s GDP beat forecasts and BoJ rate hike expectations fail to lift the yen as US rate hike odds and oil prices dominate.
The Japanese yen remains weak, with USD/JPY trading just above 160.00 despite positive domestic catalysts. First-quarter GDP grew 0.5%, exceeding expectations, and the Bank of Japan is poised to raise rates on June 18. Authorities have also signaled support for a stronger currency in recent weeks.
However, the yen’s gains are overshadowed by a widening US-Japan interest rate gap. Friday’s US nonfarm payrolls report showed 172K jobs added, far above the 85K consensus, lifting Fed rate hike odds to 72% by December. Meanwhile, Japan’s gradual tightening from a 0.75% base rate offers little support. Rising Brent crude prices, up over 5% early Monday, further pressure the yen by worsening Japan’s trade balance.
The pair remains near levels that triggered Tokyo’s intervention in April, with markets still favoring further upside.