JPY flows: JPY firm after stronger than expected Q2 GDP
Japanese GDP rose 0.3% q/q in Q2, supporting the JPY
It’s looking like a quiet Friday in Europe, with no European data of significance. This afternoon’s US retail sales data will be the main focus of the day. Overnight, stronger than expected Japanese Q2 GDP at 0.3% q/q helped to push the JPY higher across the board, increasing hopes of a BoJ tightening this year. USD/JPY remains well above the levels suggested by long term yield spread correlations, and the JPY continues to be held back by the general risk positive tone that provides support for JPY crosses. But the risks of a significant USD/JPY decline do look to be mounting. EUR/USD looks likely to remain range-bound with the 1.17 level looking hard to break above and support below 1.16, but the US retail sales data later could trigger a test of either end.
