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Yen Little Changed as Growth Sluggishly Expands

Gary Kerdus

THE TAKEWAY: Japanese GDP sluggishly expanded > Fundamental signals continue to point towards economic slowing > Yen unchanged

The Japanese Yen was little changed versus the Australian Dollar as Japan’s gross domestic product for the second quarter eased to 0.3 percent, down from 1.3 percent in the first quarter. Output figures were in-line with estimates as recent data released further suggests a weakening economy. Consumer prices have decelerated since August 2011 and industrial production dropped off sharply in June, declining to -1.5 percent from +6.0 percent in May.

Moreover, growth figures in Europe and China have also shown signs of easing suggesting the global economy may be struggling to find traction.

The Yen is closely linked to risk sentiment trends as investors have a tendency to sell high risk assets, like equities and higher yielding currencies, in exchange for lower yielding, highly liquid assets like the Yen as markets become volatile. Furthermore, the European debt crisis has played a large role in stoking market volatility and should continue to weigh on global growth into the future.

AUD/JPY, 5 Minute Chart

Yen_Little_Changed_as_Growth_Sluggishly_Expands_body_Picture_1.png, Yen Little Changed as Growth Sluggishly Expands