The Japanese Yen weakened against the US dollar following the release of weaker-than-expected fourth-quarter GDP figures. Concerns about subdued domestic demand and the potential for near-term monetary tightening in Japan are weighing on the currency. Investors are closely monitoring upcoming macroeconomic releases and speeches from central bank officials for further direction.
- The Japanese yen weakened past 153 per dollar.
- Japan’s Q4 2025 GDP growth came in at 0.1% QoQ, below the expected 0.4%.
- Consumer spending, a major component of GDP, rose only 0.1%, indicating weak domestic demand.
- Prime Minister Sanae Takaichi is committed to supporting growth through fiscal measures.
- The yen rallied nearly 3% the previous week on fiscal expansion expectations and potential rate hikes.
- Weak GDP figures curb tightening expectations from the Bank of Japan.
- BoJ Governor Kazuo Ueda clarified that discussions with the Prime Minister did not explicitly address interest rates.
- Improving economic prospects tend to enhance a currency’s appeal, but weak data limits the Yen’s upside potential.
The current economic climate presents a challenge for the currency. Subdued growth and uncertainty surrounding monetary policy are creating headwinds. Fiscal measures may provide some support, but the currency’s trajectory hinges on future economic data and signals from policymakers.