When is Japan’s Q2 GDP and how could it affect USD/JPY?

Japan’s Finance Ministry is up for releasing the final version of the second quarter (Q2) 2020 Gross Domestic Product (GDP) figures at 23:50 GMT on Monday, early Tuesday morning in Asia.

Market consensus bears the burden of the coronavirus (COVID-19) outbreak while suggesting an additional contraction of -8.1% versus the preliminary figures of -7.8% QoQ. It’s worth mentioning that the Annualized GDP numbers are also likely to deteriorate from the initial estimations of -27.8% to -28.6% during the reported period.

Considering the Bank of Japan’s (BOJ) readiness to adopt unconventional monetary policy tools should the economy deteriorate, today’s GDP becomes the key for the USD/JPY traders.

How could it affect USD/JPY?

Considering the risks to Asia’s major economy highlighted by the BOJ policymakers, in the latest meeting, any further weakness in the GDP figures will push the Japanese central bank towards further easing. While the downbeat data may offer immediate weakness to the USD/JPY pair, the risk aversion wave, mainly backed by the Sino-American and Indian-China tussles, can question the JPY bears.

Technically, a slow grip upwards from 105.20 favors the quote to confront 50-day SMA, near 106.40, but any further upside will be capped by the 100-day SMA, at 106.88 now. Meanwhile, an ascending trend line from July 31, currently around 105.55, may restrict the pair’s nearby downside.

Key Notes

USD/JPY Forecast: Waiting for clues from yields

About the Japanese Q2 GDP

The Gross Domestic Product released by the Cabinet Office shows the monetary value of all the goods, services and structures produced in Japan within a given period of time. GDP is a gross measure of market activity because it indicates the pace at which the Japanese economy is growing or decreasing. A high reading or a better than expected number is seen as positive for the JPY, while a low reading is negative.