Nikkei 225 Resilient as BoJ Faces Pressure Amid Yen's Cautious Rebound

The Nikkei 225 Index continued its upward trend, reaching its highest level since July 10 despite weak Japan GDP data. The index held steady at 68,935 points, up by 14% from its lowest point on July 29.

Japan's economy expanded by 1.1% in the second quarter, missing the expected 2% growth. This slowdown was attributed to soft domestic demand offsetting soaring exports and the impact of the US-Iran war.

The Japanese yen staged a cautious rebound, with the USD/JPY pair pulling back to 159, below last week's high of 159.6. Traders are watching for potential intervention by the Bank of Japan (BoJ).

However, any BoJ intervention may be limited due to the significant spread between US and Japanese interest rates, with US rates ranging from 3.50% to 3.75%, while Japan's rate remains at 1%. This has created a substantial opportunity for carry traders to profit.