Today, on August 13th, 2014, the US Dollar continued the rally against the Japanese Yen. In particular, it managed to gain 0,24% after Japan published the long-awaited GDP report for Q2 2014.
According to the published data, the world's 3rd biggest economy saw a sharp slowdown during the reporting period. Economists anticipated a decline down to 7,1% but the actual figures came out even weaker – 6,8% y/y.
Apparently, the current weakness of the Japanese economy resulted partially from the recent sales tax increase introduced for the first time in 17 years. According ot the published data the Japanese GDP declined below 7% down to 6,8%
Now traders, investors and economists keep on wondering whether this is going to be a short-term decline or we are about to see a prolonged period of economic weakness, which will eventual reduce to nothing all the efforts made by Premier Abbe and aimed at dragging the national economy out of the current recession. It should be noted that the recent sales tax hike was introduced to reduce the country's huge debt. Needless to say that the hike shocked the entire economy.
USDJPY Prospects
Since August 8th, the US Dollar has been developing another wave of growth against the Japanese Yen. According to Masterforex-V Academy, the H1 chart of USDJPY is currently showing us a strong rally of the American currency against its Japanese counterpart.
There was no major fluctuation of the currency exchange rate during the GDP release. The price is consolidating close to 102,46. The US Dollar has failed to break above the level so far. A break above it will give way to 102,93.
Alternatively, higher geopolitical risks, especially if coupled with week economic stats from the USA, may trigger a downswing to 102,23 and 102,09 ,thereby making the Japanese Yen stronger against the US Dollar.
