Yen Wobbles Briefly as Japan Takes Axe to 3Q GDP
- Third quarter Japanese GDP data were revised sharply lower
- On-year, growth was 1.3%, official figures showed, down from 2.2% initially
- FX action was limited, news of new methodology may have drawn the numbers’ sting
The revised official take on third-quarter Gross Domestic Product came with at a rise of just 1.3% on-year. That was a huge miss compared to both the preliminary snapshot of 2.2% and the expected 2.3% gain. The quarterly growth was also revised lower, to 0.3% from the 0.5% preliminary estimate.
Annualized growth has been on a roller-coaster ride since the start of 2015, with the high of 5% seen in the first three months of that year followed by a much patchier performance which has included two quarters of contraction.
Thursday’s data will resolve little for those hungry for a trend but, more worryingly for Tokyo, was news that domestic demand was essentially flat in the third quarter of this year. This is despite the herculean efforts of both the administration and the central bank to get Japanese consumers to spend.
The numbers didn’t have a huge effect on the foreign exchange markets, however. Wires reported that Japan has adopted a new base year for calculating GDP, which led to changes in previous data and could have made forecasting harder. The new method has reportedly been applied to data going back to 1994.
USD/JPY got up to about 113.72, from 113.64 shortly before the numbers.
Elsewhere in a busy morning for Japanese data, the trade surplus for October came in at Y587.6 billion ($5.2 billion). This was below the Y603 billion expected and the previous month’s Y642.4 billion.
Short-lived gains: USD/JPY
Chart compiled using TradingView
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--- Written by David Cottle, DailyFX Research