9 Mar 2015
Japan GDP revised lower, officials wary of USD/JPY destabilization – BTMU
FXStreet (Barcelona) - Derek Halpenny, European Head of GMR at Bank of Tokyo-Mitsubishi UFJ, shares that Japan lowered its Q4 GDP to 1.5% from prevoous 2.2%, and further adds that the expected change in Fed’s forward guidance will keep Japanese officials maintain a cautious approach due to concerns about destabilization of USD/JPY.
Key Quotes
“After heavy yen selling on Friday versus the US dollar, USD/JPY was more stable today in response to the GDP data which saw the Q4 data revised lower from 2.2% to 1.5% on an annualised Q/Q basis.”
“The reason for the downgrade was mainly down to capital spending, which was revised down from +0.1% to -0.1% and private inventories which originally was reported to have contributed 0.2ppt to overall GDP but was now estimated to have taken 0.2ppt off growth.”
“The good news was that household consumption was actually revised higher and certainly points to the prospect that the Japanese consumer has recovered from the sales tax increase hit in Q2 and Q3 last year. The Economy Watchers’ Survey also suggests this with the current Index up from 45.6 in January to 50.1 in February - close to the initial recovery peak after the sales tax increase last year.”
“BOJ Deputy Governor Nakaso spoke today and came across a little cautiously when communicating on the yen. He stated that the yen should move “stably” reflecting economic and financial fundamentals. He declined to state that yen depreciation was a positive overall taking a more nuanced approach that there are different impacts for different segments of the economy.”
“We suspect a more cautious approach amongst Japanese officials is very likely going forward – if the Fed do move to raise the key rate in the US this week, there may well be concerns over a destabilising jump in USD/JPY.”
Key Quotes
“After heavy yen selling on Friday versus the US dollar, USD/JPY was more stable today in response to the GDP data which saw the Q4 data revised lower from 2.2% to 1.5% on an annualised Q/Q basis.”
“The reason for the downgrade was mainly down to capital spending, which was revised down from +0.1% to -0.1% and private inventories which originally was reported to have contributed 0.2ppt to overall GDP but was now estimated to have taken 0.2ppt off growth.”
“The good news was that household consumption was actually revised higher and certainly points to the prospect that the Japanese consumer has recovered from the sales tax increase hit in Q2 and Q3 last year. The Economy Watchers’ Survey also suggests this with the current Index up from 45.6 in January to 50.1 in February - close to the initial recovery peak after the sales tax increase last year.”
“BOJ Deputy Governor Nakaso spoke today and came across a little cautiously when communicating on the yen. He stated that the yen should move “stably” reflecting economic and financial fundamentals. He declined to state that yen depreciation was a positive overall taking a more nuanced approach that there are different impacts for different segments of the economy.”
“We suspect a more cautious approach amongst Japanese officials is very likely going forward – if the Fed do move to raise the key rate in the US this week, there may well be concerns over a destabilising jump in USD/JPY.”