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Dollar jumps after Japan GDP report

The US dollar has gained ground versus the yen after Japanese growth figures missed expectations.

All trading involves risk. Losses can exceed deposits.

Japanese GDP increased by 0.6% in the second quarter of 2013 compared with the same period a year earlier, with economists expecting an increase of 0.9%. This is the third consecutive quarter of positive growth which could be a sign that the Bank of Japan’s aggressive monetary policy is working.

The Bank are following in the footsteps of the US Federal Reserve – by effectively printing more money they are devaluing the yen with the aim of ramping up exports, which should increase output.

Traders bought the US dollar and sold the yen after the growth figures came in below estimates, which could mean the Bank may keep its monetary-easing policy in place for the time being.

Last week some members of the Federal Reserve said that the US could begin to trim its stimulus package as early as September. If Fed member James Bullard talks about tapering on Wednesday, we could see the dollar rally.

Spot FX USD/JPY chart

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