Yen Falls Below 154 as Japan GDP Growth Revised Upwards

The Japanese yen has fallen below 154 against the US dollar, hitting a new low since February 19. This decline is attributed to a combination of positive economic data and expectations surrounding monetary policy.

Japan's second-quarter annualized quarterly GDP growth rate was revised up from an initial estimate of 1.1% to 1.4%, though it remained below the median economist forecast of 1.6%, 1.8%. This upward revision has cleared the final data-related hurdles for the Bank of Japan to raise interest rates.

Economists at Daiwa Securities noted that maintaining growth at this level is 'notable' given Middle East tensions, but emphasized that the data provides 'no reason to worry about growth,' thereby clearing the path for the Bank of Japan to continue advancing its rate-hiking cycle.

The continued improvement in real wages not only enhances households' actual purchasing power but also provides a solid foundation for the steady expansion of domestic demand. The swap market has priced in a 98% probability of the Bank of Japan raising interest rates to 1.25% next week, with a further hike to 1.5% in January fully priced in.