The Japanese Yen is weaker across the board after the bank of Japan failed to deliver the increased degree of hawkishness that the market was looking for. The GDP data released a few hours before provided a good clue as to why the central bank may have opted to remain conservative.
Growth in the first quarter was a weaker than expected 0.7 percent, which drove the annualized pace of growth from 5.0 percent down to 2.4 percent. The deflator did improve, but ultimately it still remains in negative territory. The details of the data indicate that even though exports are increasing, capital expenditures is weak. There is not enough here to push a more aggressive stance by the BoJ so BoJ Governor Fukui simply reiterated that interest rates will be adjusted gradually. The economy is still struggling to recover and even though the weak yen should speed things up, Japan still has a long way to go.