Yen Jumps as Japan’s Economy Beats Expectations — Dollar Slows Down
The Japanese Yen got a strong boost after Japan’s economy grew faster than expected in the second quarter. At the same time, the U.S. dollar’s recent strength is fading.
Japan’s economy expanded 0.3% in Q2, or 1.0% on an annual basis, which is better than what analysts predicted. This growth is making investors think the Bank of Japan (BoJ) could raise interest rates sooner than expected, giving the yen more power in the forex market.
On the other side, the U.S. dollar is losing some momentum as traders remain unsure about the Federal Reserve’s next move. Even though inflation in the U.S. is cooling, the Fed has not shown clear signs that it will cut interest rates soon.
In the forex market, the yen is becoming more attractive compared to the dollar. This is shifting the USD/JPY pair lower as demand for the yen rises.
Impact:
* If the BoJ hints at raising rates, the yen could strengthen further and push USD/JPY lower.
* However, if U.S. economic data improves, the dollar could bounce back quickly.