The Japanese yen has posted gains in the Wednesday session, erasing most of the losses seen on Tuesday. In North American trade, the pair is trading at 111.29, down 0.29% on the day. In economic news, Japanese BSI Manufacturing Index rebounded with a gain of 6.5, but this fell short of the estimate of 8.0 points. In the U.S., PPI and Core PPI both came in at -0.1%, missing their estimates. Later in the day, Japan releases Core Machinery Orders and PPI. On Thursday, the U.S publishes CPI as well as unemployment claims.
The Japanese economy showed strong expansion in the second quarter. GDP gained 0.7%, matching the estimate. This was an impressive rebound after a decline of 0.2% in Q1. On an annualized basis, GDP in Q2 was revised upwards to 3.0%, up from 1.9%. This gain marked the strongest gain in over two years. The Bank of Japan meets next week and is expected to hold its short-term interest rate target at -0.1 percent and a pledge to guide long-term rates near zero percent.
The U.S-China trade war has been on pause, but could heat up again at any time. The ball is currently in the corner of President Trump, who has threatened to impose tariffs on $200 billion worth of Chinese tariffs. The time period for public consultations ended last week, which means that Trump is free to announce another round of tariffs at any time. Despite fears that the trade war could trigger a recession, trade between the U.S and China actually increased in August. The dollar has benefited from the global trade war, and further tariffs against China could unnerve investors and propel the greenback upwards.
