Yen rebounds after Japan Q3 GDP growth beats forecasts
Industrial output jumps 1.6%, strengthening the Yen's outlook
The Yen bounced back against the US dollar on Friday after a challenging start to the week, during which the Yen sank to a 16-week low of 0.006380. Positive news from Japan spurred the recovery, shifting sentiment and lifting the currency against the US dollar.
The latest news regarding Japan’s economy showed unexpected resilience in the third quarter by growing at an annualized rate of 0.9%. While this marked a slowdown from the previous quarter’s revised 2.2%, it edged past the 0.7% consensus forecast. The Cabinet Office highlighted increased consumer spending on cars, food, and mobile phones as key drivers. Private consumption also grew 0.9% quarter-on-quarter, surpassing expectations, despite the challenges posed by a major typhoon.
Economists suggest these figures may encourage the Bank of Japan (BOJ) to continue on its path toward policy normalization. BOJ rate hikes are now seen as increasingly likely in December or January, particularly as steady consumption and wage increases bolster confidence in Japan’s economic recovery.
Industrial production adds to the Yen optimism
Adding to the positive data, Japan’s revised industrial production for September rose by 1.6%, beating both the forecast and the preliminary estimate of 1.4%. This uptick suggests that manufacturing and utility output are gaining momentum, further supporting the case for a stronger Yen.
The combination of better-than-expected GDP growth and rising industrial output could create headwinds for the USD/JPY pair in the near term, particularly if the BOJ moves forward with a rate hike. However, the pair’s broader trend remains influenced by US monetary policy and global risk sentiment.
Market participants are now anticipating the revised GDP figures on December 9 for further cues, especially as this data will arrive just before the BOJ’s critical December meeting.
Breakout from nearly three weeks of consolidation has driven USD/JPY to a 16-week high. This milestone reflects the yen’s ongoing decline against the dollar.
