The yen weakened immediately after the release of Japan’s GDP, which showed growth of 0.2 per cent quarter-on-quarter in the fourth quarter of 2016, missing estimates of 0.3 per cent growth. The data suggested the Bank of Japan will likely leave its monetary policy unchanged for a longer period. The GDP figure came in lower despite a boost to exports from a weaker Japanese currency.
The softer yen helped the dollar rise to a two-week high of 114.16 in early Asian trading. Meanwhile, the dollar/yen pair was also helped higher after there was no mention of currency manipulation during the summit over the weekend with US President Donald Trump and Japanese Prime Minister Shinzo Abe. The market’s focus now will turn back to Trump’s tax plan and this will help buoy the dollar.
The dollar index, which measures the US currency against a basket of major currencies, rose to as high as 100.89 in Asia.
The euro slipped to a session low of $1.0611 before steadying. The single currency is likely to remain under pressure ahead of the upcoming EU finance ministers meeting on February 20. Focus this week will also be on Eurozone GDP for the fourth quarter.
The pound rose against the dollar during the session to eventually peak above the key $1.2500 level in late session trading. The main driver for sterling this week will be key UK data, which include employment and inflation data.
In other currencies, the Australian dollar was little changed in Asia today and traded between $0.7657 and $0.7680.
In commodities, gold held steady around $1230 an ounce while oil prices remained close to Friday’s levels. WTI crude traded around $52.80 a barrel in Asia. Helping oil prices rise was a report from the International Energy Agency, which said OPEC has shown 90 percent compliance with the agreement on production cuts made late last year.
The economic calendar for the rest of the day is light. Investors will likely begin focusing on important events this week, including Fed Chair Janet Yellen’s testimony before the Senate Banking Committee in Washington DC tomorrow.