Yen Rises on Shifting US Rate Outlook, Despite Japan's Weak GDP

The yen rose by 0.2% against the US dollar on Monday to 159.055, a second consecutive day of modest gains.

This advance came despite Japan's GDP data for the April to June quarter showing an annualised growth rate of just 1.1%, well short of the 2.0% rate economists had forecasted.

The Bank of Japan's expected rate hike in September may not be derailed by this miss, as the GDP deflator held at 2.6% year on year in Q2, comfortably above the central bank's 2% inflation target.

The focus is shifting from domestic data to the changing US rate outlook, with fed funds futures now pricing a 66.9% probability that the Federal Reserve holds rates steady at its next meeting.