The Japanese yen continues to roll against the US dollar and has posted gains for a third straight trading day, gaining 1.9% during that time. In the European session, USD/JPY is trading at 151.43, down 0.53% on the day.
Japan’s Q4 GDP beats estimate
Japan’s GDP in the fourth quarter rose 0.7% q/q, blowing past the market estimate of 0.3% and above the upwardly revised 0.4% gain in the third quarter. This marked the third straight quarter of quarterly growth, pointing to stronger economic activity. On an annualized basis, GDP jumped 2.8%, well above the market estimate of 1% and beating the revised third-quarter GDP gain of 1.7%.
The strong GDP report was driven by an increase in exports. Private consumption gained just 0.1%, compared to a 0.7% gain in the third quarter and higher than the market estimate of -0.3%. The weakness in domestic demand, which was also reflected in a decline in imports, is weighing on economic growth.
Inflation continues to move higher, and December CPI hit 3% y/y, its highest annual level in 16 months. There are growing expectations that the Bank of Japan will again raise rates in the coming months, although the central bank isn’t signaling any particular dates. The BoJ raised rates by a quarter-point in January and the next meeting is on March 19.
The US wrapped up the week with a soft retail sales report. January retail sales slid 0.9%, much worse than the market estimate of -0.1% and following a solid gain of 0.7% in December. This was the sharpest decline since March 2023, as severe weather and the Los Angeles fires dampened consumer spending. Annually, retail sales eased to 4.2%, down from an upwardly revised 4.4% in December and above the forecast of 3.7%.
USD/JPY Technical
- USD/JPY has pushed below support at 151.86 and is putting pressure on support at 151.36
- 152.49 and 153.96 are the next resistance lines
