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Yen resumes gains on strong Japanese growth data
AI Summary
- Japanese yen rose on strong economic growth data, nearing a three-week high against major currencies
- Expectations rise for Bank of Japan to raise interest rates by 25 basis points in September
- Market pricing for rate hike increases to 45% after GDP data, with focus on upcoming inflation, wages, and unemployment releases
The Japanese yen rose in Asian trading on Friday against a basket of major and minor currencies, resuming gains that had briefly paused yesterday against the US dollar, moving again toward a three-week high. The rise came after stronger-than-expected data on Japan’s economic growth — the world’s fourth-largest economy.
The data boosted expectations that the Bank of Japan could raise interest rates by 25 basis points in September, pending more upcoming releases on inflation, wages, and unemployment.
Price Action
USD/JPY fell about 0.4% to ¥147.20 from today’s opening at ¥147.75, after hitting a session high of ¥147.87.
On Thursday, the yen ended down 0.25% against the dollar, its first decline in three days, after earlier touching a three-week high at ¥146.21.
Aside from profit-taking, yen levels weakened alongside most other major and minor currencies after strong US Producer Price Index data.
Japanese Economy
Preliminary GDP figures showed Japan’s economy grew 0.3% in Q2 2025, above market forecasts of 0.1% growth. The economy posted flat growth (0.0%) in Q1.
The stronger-than-expected GDP reading came despite Japan’s struggle with an unstable trade environment in Q2, with a trade deal with the US only reached on July 23. Under this deal, Japan faces a blanket 15% tariff on all exports to the US, including cars.
Interest Rate Outlook
Following the GDP data, market pricing for a September BoJ rate hike of 25 basis points rose from 38% to 45%.
Investors await more data on inflation, unemployment, and wages to refine those expectations.
Minutes from the BoJ’s June policy meeting showed some board members would consider resuming rate hikes if trade tensions eased.
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