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Japanese Yen Gains as 15.2% Contraction in Q1 GDP Proves To Be Better Than Expected
Wednesday, 20 May 2009 22:02:13 GMT  |  Terri Belkas, Currency Strategist
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An interesting thing happened in the FX markets on Tuesday night: the Japanese yen gained following better-than-expected Japanese economic data. Though Japan’s economy shrank by a record 15.2 percent in Q1 from a year earlier, the decline was not as severe as projected since Bloomberg News was calling for a 16.1 percent contraction. The drop was led by falling private demand, as consumption declined further and businesses cut back on investment. Furthermore, exports plunged by a record as the Japanese yen held strong and the economies of Japan’s biggest trade partners slowed or fell deeper into recession. All told, there’s little in the way of positive news reflected in this report, but in the FX markets, everything is relative. The bigger factor here was that the Japanese yen didn’t necessarily respond to risk trends, and as a result, leaves Japanese fundamental reports as a key thing to watch going forward.

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