Forex - Yen gains despite downward revsions to 4Q GDP

Investing.com - The Japanese yen gained strength on Monday after data showed weaker GDP than previously reported for the fourth quarter, and the euro rebounded ahead of the latest meeting on Greece.

USD/JPY traded at 120.66, down 0.13%, while AUD/USD changed hands at 0.7722, flat, and EUR/USD was quoted at 1.0850, up 0.08%.

Japan's adjusted current account surplus came in at ¥1.06 trillion, narrower than a surplus of ¥1.6 trillion expected, while GDP rose 0.4% for the quarter at a revised pace lower than the 0.6% quarter on quarter expected for an annual pace of 1.5%, well below the 2.2% increase seen.

Last week, the U.S. dollar rallied to fresh eleven-and-a-half year highs against a basket of major currencies on Friday as a strong U.S. jobs report solidified expectations for higher interest rates.

The Labor Department reported that the U.S. economy added 295,000 jobs in February, far more than the 240,000 forecast by economists. The unemployment rate ticked down to 5.5% from 5.7% in January, the lowest since May 2008. Economists had forecast the unemployment rate would fall to 5.6%.

The robust jobs report fuelled expectations that the Federal Reserve will start raising interest rates around the middle of this year.

The dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was quoted at 97.64, down 0.10%.

EUR/USD dropped 1.69% to 1.0841 on Friday, a day after European Central Bank President Mario Draghi confirmed that it will begin purchasing euro zone government bonds on Monday under its new quantitative easing program.

The combined monthly asset purchases will amount to €60 billion per month and are expected to run until September 2016, or until the ECB sees that inflation is on a “sustained path” to its target of close to, but below, 2%.

Draghi also said that the ECB expects to see higher growth and inflation over the coming years.

In the week ahead, markets will be watching talks on Greece by euro zone finance ministers in Brussels on Monday, while Thursday’s U.S. retail sales report will also be closely watched for further indications on the strength of the recovery.

On Monday, Eurogroup finance ministers are to hold a meeting in Brussels to discuss funding options for Greece.

Elsewhere in Europe, Switzerland is to release data on retail sales.