Forex - USD/JPY rises on surprise Japanese GDP decline

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Investing.com - The Japanese yen fell modestly against the U.S. dollar during Asian trade Thursday following the release of a weaker-than-expected fourth-quarter GDP report.

In Asian trading Thursday, USD/JPY rose 0.05% to 93.47. The pair was likely to find support at 92.16, the low of February 8 and resistance at 94.39, Tuesday's high and a two-and-a-half year high.

According to official data, Japan's fourth-quarter GDP reading showed a contraction of 0.04%. Economists expected growth of 0.04% in the world's third-largest economy.

Some traders may inclined to view the surprisingly weak growth report as another opportunity for Prime Minister Shinzo Abe to push his weak yen/pro inflation agenda. Japan, the world's third-largest economy and one long suffering from deflation, may see the GDP report as the impetus to engage asset-buying sooner-than-expected.

The Bank of Japan recently committed to an open-ended asset-buying program, but said related activities would not commence until 2014, disappointing financial markets along the way.

The yen also weakened after former Bank of Japan Deputy Governor Kazumasa Iwata, who is believed to be a possible contender to become the central bank's next chief, said an exchange rate of 90 to 100 for USD/JPY would be tolerable.

Analysts and traders see the possibility of BoJ taking action in the second quarter after a new leader for the central bank is selected. Working on the assumption the new BoJ is in line with Abe's desires for a weaker yen, a strong possibility, the yen could weaken further in the months ahead.

Data also showed Japanese exports fell for a seventh straight month in December. Last month, Goldman Sachs raised its GDP growth estimate for Japan for the fiscal year ending April due to the weakening.

Elsewhere, EUR/JPY fell 0.04% to 125.62 while AUD/JPY fell 0.06% to 96.75. GBP/JPY was off 0.09% at 145.10.


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This article appears in: Investing , Forex and Currencies

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