Yen Rises Amid Strong Japan GDP Data

(RTTNews) - The Japanese yen strengthened against other major currencies in the Asian session on Monday, after Japan's gross domestic product expanded on quarter in the fourth quarter of 2024.

The strong GDP data led the market to speculate that the Bank of Japan to raise interest rates further this year. The markets are already accounting for an additional 37 basis points of increases by December.

Data from the Cabinet Office said in Monday's preliminary report showed that Japan's gross domestic product expanded a seasonally adjusted 0.7 percent on quarter in the fourth quarter of 2024. That beat forecasts for an increase of 0.3 percent and was up from the upwardly revised 0.4 percent gain in the previous three months.

On an annualized basis, GDP was up 2.8 percent - again exceeding expectations for an increase of 2.0 percent and up from the upwardly revised 1.7 percent gain in the three months prior.

Capital expenditure was up 0.5 percent on quarter after slipping 0.1 percent in Q3, while external demand added 0.7 percent after slipping 0.1 percent in the previous quarter.

The GDP price index was up 2.8 percent on year, in line with estimates and up from 2.4 percent in the third quarter.

In other economics, data from the Ministry of Economy, Trade, and Industry showed that Japan's industrial production decreased at the end of the year, revised from a rebound estimated initially. Industrial production fell by a seasonally adjusted 0.2 percent month-on-month in December, which was slower than the 2.2 percent fall in November. However, the decline in industrial production came in contrast to the initial estimated growth of 0.3 percent.

On a yearly basis, the decline in industrial production was 1.6 percent, compared to a 2.7 percent fall a month ago.

Further, data showed that capacity utilization registered a monthly drop of 0.2 in December, following a 1.9 percent decrease in November.

Separate official data showed that tertiary activity rose 0.1 percent on a monthly basis in December, in contrast to a 0.3 percent decrease in November.

In the Asian trading today, the yen rose to 5-day highs of 158.92 against the euro, 190.71 against the pound and 168.26 against the Swiss franc, from Friday's closing quotes of 159.81, 191.71 and 169.29, respectively. If the yen extends its uptrend, it is likely to find resistance around 155.00 against the euro, 186.00 against the pound and 165.00 against the franc.

Against the U.S. and the Canadian dollars, the yen advanced to a 1-week high of 151.48 and a 5-day high of 106.88 from last week's closing quotes of 152.33 and 107.37, respectively. The yen may test resistance around 150.00 against the greenback and 104.00 against the loonie.

Looking ahead, Canada housing starts for January is set to be published in the New York session.

U.S. stock markets are closed in account of Presidents' Day holiday.