USD/JPY Forecast June 15-19 – Yen Touches 4-Week High as Japan’s Contracts Less Than Expected

USD/JPY fundamental mover

In Japan, GDP for the first quarter contracted by 2.2%. This was a second straight contraction, which means that the economy is officially in recession. Still, the decline was smaller than the initial read of -3.4 percent, which helped the yen gain ground last week. The country’s current account surplus narrowed to 0.25 trillion yen, down sharply from 0.94 trillion yen beforehand. This marked the smallest surplus since 2014. As well, the Business Survey Index sank to -54, indicative of deep pessimism in the manufacturing sector.

In the U.S., consumer inflation posted a third consecutive decline, as the weak U.S. economy is not generating any inflation. Both the headline and core figures came in at -0.1%. The Fed made no change to the benchmark rate and indicated that it has no plans to alter rates from their ultra-low levels prior to 2022. Producer Price Inflation numbers were a mix. The headline read gained 0.4%, while the core figure fell by 0.1 percent. Unemployment claims continue to ease, falling to 1.54 million last week, down from 1.87 million beforehand.

See all the main events in the Forex Weekly Outlook