USD/JPY continued its post-NFP recovery and is trading at 98.40, close to 100 pips above the close on Friday, which was already above the deep lows on Friday.
The upgrade of GDP and other positive figures supported the continued weakness of the yen. Also the big recovery in the Nikkei stock index and perhaps the fear of intervention by the BOJ also contributed.
According to the revised GDP figure, Japan’s economy grew by 1% instead of 0.9% originally reported. The revision included an upgrade of the GDP deflator: from a drop of 1.2% to 1.1%. This is important as deflation is now weaker than thought.
In addition, Japan’s current account surplus came out more than double the early expectations: 0.85 trillion yen instead of 0.39 expected. Bank lending grew by 1.8%, stronger than the previous figure of 1.7%.
Also consumer confidence is on the rise: from 44.5 to 45.7 points, stronger than 44.8 predicted. Only the Economy Watchers Sentiment fell short of expectations by dropping from 56.5 to 55.7, below 56.3 estimated.
The strong correlation between USD/JPY and Japanese stocks continues. The Nikkei 225 index rose by nearly 5% to 13,514.20 points.
USD/JPY started the week above the close at around 97.50 and from 97.69, it never looked back. So far, the peak was 98.42 and the pair is trading close to this area now.
Will the pair reconquer the 100 line? The markets are awaiting the all-important BOJ decision due during the Asian session of Tuesday.
For more lines, events and analysis, see the USDJPY forecast.
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When the pair fell on Friday, there was speculation that the BOJ could intervene to weaken the yen. This is less likely at current levels. It is believed that a range of 100-105 is the preferred range for Japan.
