On Monday, the Cabinet Office in Japan released the GDP data for the second quarter. It rebounded from -3.7 percent to the level of 1.3% year – on – year based on that release. 

It is better than the market expectation of 0.7%. In a quarter – over – quarter basis, the Japan’s economy also has the quite solid growth. This GDP data increased from 0.9% to 0.3%.

That is higher than the rising projection of 0.2%. The consumption increase and capital purchase become the major catalyst of that GDP rebound in this year second quarter. 

Unexpectedly, consumption is recovered from -1.0 percent to become 0.8%. The same thing happened on the capital purchase sector which grows from -1.3% to 1.7%. Export is also rising by 2.9%.

The Prediction from some Analysts

Due to the positive development this time, some analysts predicted that the economic growth in Japan will still low or even having a potential to experience a contraction in the third quarter. 

It is related to the emergency situation which is applied again. The aim is to handle the coronavirus spread. Not many people are optimistic about the economy prospect there. 

It is especially when the increasing cases of the coronavirus makes the lockdown policy to be applied again. That restriction or lockdown may be tighter than before. 

The Japan’s economy is experiencing the stagnation in the first semester this year and there is a contraction risk in a July-September period. To ensure the rebound, they must wait until the end of this year. 

USD/JPY Continues Its Weakening

The increasing cases of COVID-19 delta variant which has been spreading disturbs the global stocks chain. That also presses the demand which may have the wide impact on the Japanese economy. 

It is especially for the third quarter ahead. The GDP data in the country is quite impressive so that it is able to push the Yen strength ahead the US dollar. When this news was written, it is in 109.38.

It means that the currency is 0.2% lower from the daily open price. The United States consumers sentiment data release is significantly decreasing and it has an effect. 

In fact, it has a contribution to weight on the Dollar movement. The cause is that the declining consumers trust that makes the market optimism to The Fed tapering in a closer time is fading.

The Tapering Optimism Disturbed by the Consumers Trust 

The USD felt to the low level in a week ahead some major currencies in the Friday trading session. When this news was written, the index of dollar was sold in 92.52 or 0.5% lower.

The University of Michigan (UoM) survey showed that the U.S. Consumer Sentiment index dropped from 81.2 to 70.2 in the first half of August. That's the lowest number since 2011.

The decline in the US consumer sentiment occurred at various levels of income, age, and education. In fact, the consensus expects that the sentiment this month to stagnate. 

According to Andrew Hunter, an economist at Capital Economics, sluggish consumer sentiment this time shows the concerns about the increase in cash form than the others. 

The Prediction about the Further Policy Taken by The Fed

The Declining consumer confidence figures could make the Federal Reserve in a America reconsider its stimulus tapering plan. That's what's weakening the US dollar tonight.

Essentially, investors are faced with the mixed economic data in that country over the past week. Employment and producer inflation data improved, but consumer inflation and consumer confidence slumped. 

The main driver this week is the idea that slowing inflationary pressures will dampen the boost for the Fed to do the asset purchase reduction sooner than before. Now, the Powell statement in Jackson hole is awaited.