The Japanese Yen faces challenges in capitalizing on optimistic expectations regarding an interest rate hike by the Bank of Japan (BoJ) during its upcoming meeting on December 18-19. The Yen is notable for best performance vs. the Swiss Franc. It’s failed to track a number of currencies, notably the US dollar.
Recent economic data reveals that Japan’s Gross Domestic Product (GDP) for the third quarter increased by 0.3% quarter-on-quarter and 1.4% year-on-year, aligning with analysts’ forecasts. Household consumption barely budged, with a slight increase of 0.2% on the quarter, and government spending increased by 0.7%. On the other hand, investment experienced a big gain of 0.9%. Exports increased 0.7%, but imports increased 1.3%, showing a weakened trade deficit.
As the market anticipates the BoJ’s December meeting, officials are reportedly prepared to raise interest rates, which could potentially bolster the Yen’s value. At the time of writing, the Yen is around 180.77 against the dollar. Earlier during the session, it had fallen to an intraday 180.10 low. This choppiness is indicative of the continued uncertainties over what the future path of monetary policy might look like.
The USD/JPY currency pair has mostly been kept on a short leash, contained primarily between the well-known range drawn since mid-November. Analysts suggest that this stability indicates market participants are weighing the impact of forthcoming economic data against the backdrop of potential rate changes.
On Monday, keep an eye out for new Japanese economic indicators to start rolling in. These were labor earnings, the current account, and the third revision of third quarter GDP. These figures are anticipated to provide further insight into Japan’s economic trajectory and may influence the BoJ’s decision-making process.