Japan's Q4 2017 real GDP rose 0.1% Q/Q and annual 0.5% Q/Q, below expectation for annualised 1.0% increase. However, the Japanese economy has now experienced two years of growth. In a marginal shift, private consumption rose 0.5% Q/Q suggesting households are becoming more confident in their economic outlook.
JPY continues to appreciate, but overall behaviour is confusing. Historical relationship between USDJPY and yields has totally decoupled. During the recent period of volatility, FX traders favoured safe haven currencies like the JPY and CHF, as well as the EUR.
Yet vol hast decreased significantly, as US interest expectations shown by 10-year breakeven has fallen. Japanese government leaders confirmed their confidence in BoJ Governor Kuroda, bolstering expectations that he will be reappointed for an uncommon second term. Kuroda's dovish pedigree indicated at talk of early exit is unwarranted. Clearly, from today's data, growth has returned but hardly strong enough to demand investor’s attention (especially considering JPY inverse relationship between strength and export growth). USD/JPY 107.30 'line-in-the-sand' failed to put up much of a fight.