fundamental alert

Japanese Yen Slips as Japan's Economy Falls into Recession for First Time Since 2001

Monday, 17 November 2008 22:37:19 GMT  |  Terri Belkas, Currency Strategist

The Japanese yen has traded very choppily lately, but remains below its October 24 highs where the low-yielding currency ran into critical resistance versus most of the majors.

One of the key tools to gauge the consistency of the trend for the Japanese yen has been the US stock markets, and the inverse correlation between the Dow and the yen (and US dollar) has been something we’ve been noting frequently. We don’t focus on Japanese fundamentals very often because of this correlation, but it is certainly worth noting the disappointing Japanese GDP figures for Q3. Japan's economy, the second largest in the world, fell into recession for the first time since 2001 as GDP fell an annualized 0.4 percent in Q3. This was the second consecutive contraction, and with a global economic slowdown impairing demand for foreign goods, this export-dependent nation will likely feel the pain. Nevertheless, the Japanese yen still has bullish potential as volatility remains high, leaving risk aversion in play.

Related Article: Japanese Yen May Rally Through GDP Numbers on Carry Flows


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