Japan’s economy shows signs of recovering while hanging on the back of Prime Minister Shinzo Abe’s growth policies as the gross domestic product ticks to one percent (.9 percent estimate). In price-adjusted real terms, Japan’s annualized growth reaches 4.1 percent compared to an annualized 2.4 percent in the United States and an annualized contraction of .9 percent in the eurozone.
The economy watchers assessment indicates optimism for continued growth; however, the Japanese economy watcher’s sentiment indicator ticks downwards to 55.7 after posting 56.5 in April, but estimates were still slightly lower than April at 56.1.
The Nikkei posted large gains as the yen falls nearly 1.5 percent after positive Japanese data; Nikkei futures up +395, or 2.95 percent. This comes after a large decline from highs of 16,020 to a low of 12,310.
Dollar-yen reached an intraday high on 98.97, up +1.15, but gains were after bouncing off the 50 EMA. Euro-yen posted similar gains, +1.52. The euro-yen snapped back after hitting the 50 EMA but settles below the 20 EMA. These moving averages are currently acting as resistance as yen gives back a little to the market.
The yen is expected to return to the well-know downward path after a heavy correction in the Nikkei and positive economic data out of Japan. Yen pairs should be able to regain previous highs as long as Japan’s economy continues on its path.