The Japanese Yen weakened against every major currency today with the exception of the Australian dollar. GDP growth in the second quarter was revised down to 1.2 percent from a preliminary estimate of positive 0.5 percent.
Although consumer spending rose 0.3 percent, business investment fell 1.2 percent. The sharp surprise is a major setback for the Bank of Japan, who has been looking for an opportunity to raise interest rates. This is especially true since money supply and the Eco Watchers index both deteriorated as well. Weak GDP in the context of weakening global growth should keep the central bank on hold for the remainder of the year.
Written by Kathy Lien, Chief Currency Strategist of DailyFX.com