Japanese Yen gains the upper hand after US GDP miss, BoJ eyed
- USD/JPY declines as a sharper-than-expected slowdown in US economic growth weighs on the US Dollar.
- US PCE inflation data confirm the ongoing disinflation trend, leaving monetary policy expectations largely unchanged.
- Investors are now turning their attention to the Bank of Japan's monetary policy decision on Friday.
USD/JPY trades around 162.90 at the time of writing on Thursday, down 0.31% on the day, as the US Dollar (USD) comes under pressure following the Federal Reserve (Fed) meeting on Wednesday and a series of weaker-than-expected United States (US) economic data released earlier in the day, ahead of the Bank of Japan's (BoJ) monetary policy decision.
The US Gross Domestic Product (US) expanded at an annualized rate of 1.5% in the second quarter, below the market expectation of 2.1% and following 2.1% growth in the first quarter. According to the Bureau of Economic Analysis (BEA), the slowdown mainly reflects a decline in government spending and slower investment and export growth, partly offset by stronger consumer spending.
At the same time, inflation data reinforced the narrative of a gradual disinflation process. The Personal Consumption Expenditures (PCE) Price Index, the Fed's preferred inflation gauge, fell by 0.1% MoM in June, while the annual rate slowed to 3.7% from 4.1%. The Core PCE Price Index slowed to 3.3% YoY from 3.4% in the previous month, in line with market expectations.
On Wednesday, the Fed left its benchmark interest rate unchanged at 3.5%-3.75%, as widely expected, while maintaining a hawkish tone. The decision saw three dissenting votes in favor of an immediate rate hike, reinforcing expectations that policymakers remain concerned about persistent inflation. However, the US Dollar failed to benefit from the decision and has since turned lower, as investors questioned whether the central bank would be willing to deliver additional rate hikes amid growing political pressure. Fed Chair Kevin Warsh avoided providing forward guidance during his press conference, contributing to the Greenback's decline following the meeting.
Market attention now shifts to the Bank of Japan (BoJ), which is widely expected to leave its policy rate unchanged at 1% on Friday. Investors will focus primarily on the updated economic projections and Governor Kazuo Ueda's remarks for clues on whether another rate hike could come as early as October or be delayed until December. A more hawkish message from the BoJ could provide additional support for the Japanese Yen (JPY) and keep downward pressure on USD/JPY.
Japanese Yen Price Today
The table below shows the percentage change of Japanese Yen (JPY) against listed major currencies today. Japanese Yen was the strongest against the US Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.11% | -0.02% | -0.39% | -0.01% | -0.37% | -0.75% | -0.27% | |
| EUR | 0.11% | 0.08% | -0.30% | 0.10% | -0.30% | -0.68% | -0.16% | |
| GBP | 0.02% | -0.08% | -0.35% | 0.04% | -0.34% | -0.73% | -0.21% | |
| JPY | 0.39% | 0.30% | 0.35% | 0.39% | 0.03% | -0.38% | 0.16% | |
| CAD | 0.00% | -0.10% | -0.04% | -0.39% | -0.36% | -0.76% | -0.22% | |
| AUD | 0.37% | 0.30% | 0.34% | -0.03% | 0.36% | -0.39% | 0.12% | |
| NZD | 0.75% | 0.68% | 0.73% | 0.38% | 0.76% | 0.39% | 0.56% | |
| CHF | 0.27% | 0.16% | 0.21% | -0.16% | 0.22% | -0.12% | -0.56% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Japanese Yen from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent JPY (base)/USD (quote).
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