USD/JPY rises to near 143.00 following lower-than-expected Japan GDP data

• USD/JPY breaks its four-day losing streak after weaker Gross Domestic Product data from Japan on Monday.
• Friday’s US labor data reduces the likelihood of an aggressive Fed rate cut in September.
• CME FedWatch Tool suggests the odds of a 50 basis points Fed rate cut have slightly decreased to 29.0%.

USD/JPY halts its four-day losing streak, trading around 142.90 during the Asian session on Monday. The USD/JPY pair’s recovery can be partly attributed to lower-than-expected Gross Domestic Product (GDP) data from Japan. However, robust economic growth, rising wages, and persistent inflationary pressures continue to support expectations that the Bank of Japan (BoJ) may further raise interest rates, which could limit the downside for the Japanese Yen (JPY).

Japan’s GDP Annualized expanded by 2.9% in the second quarter, slightly below the preliminary reading of 3.1% and the market estimate of 3.2%. However, this reading marks the strongest yearly expansion since Q1 2023. On a quarter-on-quarter basis, GDP grew by 0.7% in Q2, falling short of the market forecast of 0.8% but representing the strongest quarterly growth since Q2 2023.