Japanese GDP revised upwards, US NFPs jump

The Japanese yen has edged lower on Monday. In the European session, USD/JPY is trading at 150.42, up 0.26% on the day.

Japan’s GDP revised upwards in Q3

Japan’s economy expanded in the third quarter by 0.3% q/q, according to the final estimate. This edged above the initial estimate and the market estimate of 0.2%. The improvement was due to increases in capital investment and exports. However, consumption was revised downwards.

The Bank of Japan makes its rate announcement on Dec. 19 and today’s GDP data will be carefully scrutinized by Bank policymakers. The drop in consumption could be a concern for the central bank, which wants to see inflation driven by stronger demand. The meeting is live as it remains unclear whether the BoJ will press the rate-hike trigger or remain on the sidelines.

The BoJ tends not to be transparent about its rate path, one reason being that it wants to dissuade speculators from betting on the yen’s movement. Still, it’s clear that the BoJ is moving slowly towards normalization and another rate hike is very likely just a question of time. Governor Ueda has hinted a hike but a dovish member of the Bank, Toyoaki Nakamura, said on Thursday that consumption remains weak and the increase in wages may not be sustainable.

US Nonfarm Payrolls recover

US nonfarm payrolls bounced back in November with a gain of 227 thousand, above the market estimate of 200 thousand. This follows a weak October report, which was revised upwards to 36 thousand from 12 thousand. The unemployment rate ticked higher to 4.2% as expected, up from 4.1% in October.

The data has raised expectations of a quarter-pint hike at the Dec. 18 meeting, with the odds currently at 878%, up sharply from 62% a week ago.

USD/JPY technical

USD/JPY is testing support at 150.18. Below, there is support at 149.59.

There is resistance at 150.71 and 151.30.