- The Japanese Yen (JPY) falls after 3 days of gains
- Japan GDP falls -0.2% QoQ
- The US Dollar (USD) is rising against its major peers
- US consumer sentiment crashes & inflation expectations surge
The US dollar against the Japanese yen (USD/JPY) exchange rate is rising after three days of losses. The pair fell 0.81% in the previous session, settling on Thursday at 145.57. At 20:30 UTC, USD/JPY trades 0.24% lower at 145.87 and trades in a range of 144.92 to 146.10.
The Japanese yen was under pressure after data showed that the Japanese economy shrank for the first time in a year in the first three months of this year. Japan’s GDP data show the economy contracted by 0.2% between January and March. This was below the 0.1% contraction that economists had expected and marked a slowdown from the growth of 0.6% in the October to December period.
The world’s fourth-largest economy is negotiating relief from U.S. trade tariffs while seeking to shake off stagnation.
Exports, which fuel Japan’s growth, were down 0.6% whilst imports jumped 2.9%, weighing on overall GDP.
Concerns are arising that the Japanese economy could be entering a technical recession, which would be two quarters of contracting growth. Earlier this month, the Bank of Japan revised down its growth forecasts and held interest rates unchanged.
The US Dollar is rising across the board. The US Dollar Index, which measures the greenback against a basket of major currencies, is 0.21% higher at 101.09 at the time of writing, after rising 0.75% across the week.
The U.S. dollar pushed higher on Friday despite weaker-than-expected U.S. consumer confidence and as inflation expectations soared. The latest Michigan consumer sentiment sank to its second-lowest level on record, dropping to 50.8 in May, down from 52.2 a month earlier. This was below analysts’ expectations. The period was conducted between April 22nd and May 13th, a period just after the US and China agreed to reduce tariffs temporarily.
Meanwhile, U.S. consumers expect prices to rise at an annual rate of 7.3% over the next year, the highest level since 1981. Consumers saw prices rising an annual rate of 4.6% over the next 5 to 10 years.