The Japanese yen fell against major currencies on Tuesday, marking a continuation of losses for the second consecutive session versus the dollar. This decline comes after the yen hit a four-week high, with traders taking profits as global stock markets rebounded.
Weaker-than-expected GDP growth in Japan diminished expectations of a potential interest rate hike by the Bank of Japan in September. Japanese GDP grew by 0.6% in the second quarter, falling short of the anticipated 0.7% and following a contraction in the previous quarter. This data has lowered the likelihood of a rate increase to below 20%.
The USD/JPY exchange rate increased by 0.3% to 143.55 yen per dollar, with a session low of 142.85 yen. The yen had previously lost 0.65% against the dollar, marking its first profit-taking session after reaching a high of 141.76 yen.
In global markets, most indices surged in Asian trading, buoyed by strong gains on Wall Street and increased risk appetite. The European Central Bank is also expected to announce a rate cut later this week, as central banks worldwide continue their easing cycle amid slowing inflation and stalled GDP growth.
Looking ahead, investors are closely monitoring upcoming US inflation data for August, which could influence the Federal Reserve’s decision on a potential rate cut. According to the Fedwatch tool, there is a 71% chance of a 0.25% rate cut and a 29% chance of a 0.5% cut in September. Key US consumer and producer price data scheduled for release on Wednesday may provide further insight into the Fed’s future policy direction.
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