Japan’s Finance Ministry is up for releasing the preliminary reading of the fourth quarter (Q4) 2019 Gross Domestic Product (GDP) figures at 23:50 GMT on Monday.
Market consensus suggests a downbeat -0.9% QoQ figure versus +0.4% prior. Further, the yearly format also indicates an upcoming disappointment for the Japanese yen traders with a likely -3.7% figure compared to the earlier +1.8% GDP growth.
Ahead of the release, Standard Chartered said, “We expect growth to have turned negative (-0.9% q/q) on a seasonally adjusted basis in Q4, reversing from four consecutive quarters of positive growth. We expect growth to have dropped 3.5% on an annualized basis.”
While giving details, Westpac said, “Q4 GDP for Japan will be released Monday and if economists are correct we will see a sharp contraction. The current consensus is for a -3.8% SA QQ annualized outcome in Japanese GDP as a result of the increase in consumption tax, the impact of Typhoon Hagibis and ongoing tension over trade developments.”
How could Japan’s preliminary GDP affect USD/JPY?
Weak consumption figures are likely to offer another challenge to the Bank of Japan (BOJ) policymakers. Although likely disappointing figures could keep pushing the Japanese central bank towards further easing, its extra dependence on the monetary policy measures has recently been criticized by the International Monetary Fund (IMF). As a result, the diplomats might look for another window of opportunity to tame the fears of stagflation that have been fought for years.
Technically, Friday’s Doji formation on the daily chart favors the pair’s another confrontation to the 110.15 and 110.30 resistances that hold the keys to May 2019 top surrounding 110.70. On the downside, 109.50/40 area comprising 50-day and 21-day SMAs could limit the pair’s short-term declines.
Key Notes
USD/JPY on the back foot for the start of the week, testing the 10-DMA
USD/JPY Forecast: At risk of extending its slide amid risk-off
About the Japanese Q4 Preliminary 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.
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