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Unexpected performance of Japan's GDP intensifies the Bank of Japan's interest rate hikes, currency pair trends still depend on the U.S. economy
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Hello everyone, today XM Foreign Exchange will bring you "[XM Foreign Exchange Platform]: The unexpected performance of Japan's GDP has intensified the Bank of Japan's interest rate hike bets, and the currency pair trend still depends on the US economy." Hope it will be helpful to you! The original content is as follows:
XM Foreign Exchange APP News-- During the European session on Friday (August 15), the US dollar/JPY price showed a downward trend. After opening, the overall center of gravity moved downward, and the short-term bear force had a certain advantage. The US dollar/JPY was 146.908/918 intraday, down 0.57%. Japan's GDP performance exceeded expectations, increasing the market's bet on the Bank of Japan's interest rate hikes, but the trend of the US dollar/JPY still depends on the US economic situation, and retail sales data and import price data are now the focus of market attention. The dominant driver of the US dollar/JPY exchange rate remains the U.S. economic and policy background, and the next key signals may xmh100.come from retail sales and import price data released later on Friday. OCBC foreign exchange analyst Frances Cheung and Christopher Wong pointed out that US Treasury Secretary Bescent clarified that he did not call for Japan to raise interest rates, which boosted the rebound of the US dollar/yen. This morning, Japan's second-quarter GDP data was better than expected, driving a further pullback of USD/JPY. Japan's wage growth, expanded service industry inflation scope and optimistic economic activities should continue to provide support for the normalization of the Bank of Japan's policies. The renewed expansion of policy differences between the Federal Reserve and the Bank of Japan will become the core support factor for the downward trend of the US dollar/JPY exchange rate. "Trade boosts Japan's GDP Japanese economy performed beyond expectations in the second quarter, with real GDP growing month-on-month0.3%, the growth rate is three times that of the market expectation. The unexpected economic improvement this time was mainly driven by trade: despite the impact of US tariffs, Japan's exports surged by 2%, making net exports contribute 0.3 percentage points to economic growth. Private consumption accounts for more than 50% of Japan's economic activity, which is an important driving factor for inflation pressure. The indicator grew 0.2% this quarter, twice the expected value. The Bank of Japan will be encouraged by the signals of consumer resilience, but it may still be necessary to see wage growth further translated into stronger consumer spending before it can be convinced that inflation is self-sustaining. The GDP deflator, a broad economic inflation indicator that measures changes in the price of all domestic products and services, rose 3% year-on-year, down 0.3 percentage points from the first quarter. Economic growth has stabilized, trade remains resilient, and inflation remains high, which together strengthen the rationality of the Bank of Japan's restart of interest rate hikes before the end of the year. While this may satisfy Becente – he made a rare statement this week that the Bank of Japan lags in anti-inflation – it is still almost entirely determined by the U.S. in terms of the dominant drivers of the long-term trend of the US dollar/yen. US retail sales and import price data have become the focus. Against the backdrop of the release of the US Consumer Price Index (CPI) and Producer Price Index (PPI) reports, retail sales and import price data released late Friday become the next batch of risk events that may affect the US dollar/yen trend - these data will reveal the actual impact of higher tariffs on upstream price pressures and consumer behavior. The PPI report released on Thursday showed a strong performance, showing a rise in service prices, echoing the details in the CPI report, which has triggered a reversal of the US dollar/JPY exchange rate. If retail sales and import price data exceed expectations again, the bullish trend of the US dollar/JPY may continue further before the weekend. The summit between Trump and Putin in Alaska may make the exchange rate trend more xmh100.complicated, but as the market generally expects that the summit will be difficult to make significant progress, its impact on safe-haven hedging trading activities may be limited. The uncertainty of the US economy has caused violent fluctuations in the US dollar/JPY as measured by conventional standards. The recent US dollar/JPY exchange rate trend is slightly abnormal, which is likely to reflect the uncertainty of the market about the actual situation of the US economy. U.S. job growth has slowed sharply, but wage and service inflation remains firm, and there are few signs of mass layoffs at present. Although the market expects the Federal Reserve to cut interest rates for the first time this year in September, if the above content is about "[XM Forex Platform]: The unexpected performance of Japan's GDP has intensified the Bank of Japan's interest rate hike bets, and the currency pair trend still depends on the US economy" is carefully xmh100.compiled and edited by the XM Forex editor. I hope it will be helpful to your trading! Thanks for the support!
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