Although this morning's third quarter GDP figures came in a little better than analysts were expecting according to the Bloomberg survey, a closer look leaves something to be desired. The Japanese Yen (JPY) was hence unimpressed this morning, despite another attempt at verbal intervention from the Ministry of Finance, which warned against 'one-sided' movements in the exchange rate, Commerzbank’s FX analyst Volkmar Baur notes.

USD/JPY is likely to continue to be driven more by the USD

“The 0.9% quarter-on-quarter annualised increase was, as mentioned, slightly better than expected, but the previous quarter's growth was revised down, meaning that the overall growth trajectory appears weaker than previously thought. In addition, inventory accumulation appears to have made a small positive contribution to growth - a component that tends to balance out over time. The weakness came mainly from the external sector, where net exports made a significant negative contribution to growth.”

“Fixed capital formation was also down, while consumption supported growth. All in all, the GDP figures do not paint a picture of an economy gaining momentum or in danger of overheating, which would require a tightening of monetary policy. All eyes are therefore now on BoJ Governor Ueda's speech on Monday, one of the last opportunities before the blackout period to verbally prepare the markets for a possible rate hike in December.”