Ella 
In Asia on Monday, USD/JPY broke its four-day losing streak and traded around 142.90. USD/JPY’s recovery was partly due to lower-than-expected Japanese gross domestic product (GDP) data. However, strong economic growth, rising wages and persistent inflationary pressures continue to support expectations that the Bank of Japan (BoJ) may further raise interest rates, which may limit the downside for the Japanese yen (JPY).
Japan’s second-quarter gross domestic product (GDP) annual rate was 2.9%, slightly lower than the previous value of 3.1% and the expected value of 3.2%. However, the data marked the strongest annual rate since the first quarter of 2023. The second quarter gross domestic product (GDP) quarterly rate was 0.7%, which was lower than the market forecast of 0.8%, but it recorded the strongest quarterly growth since the second quarter of 2023.
Additionally, the dollar found support as Friday’s U.S. economic data increased uncertainty over the prospect of an aggressive rate cut by the Federal Reserve (FED) at its September meeting. The CME Group’s FedWatch tool shows that the market fully expects the Fed to cut interest rates by at least 25 basis points at its September meeting. The odds of a 50 basis point rate cut fell slightly to 29.0%, down from 30.0% a week ago.
The U.S. Bureau of Labor Statistics (BLS) reported that nonfarm payrolls (NFP) increased by 142,000 jobs in August, below expectations for 160,000 jobs but an improvement from July’s downwardly revised 89,000 jobs. Meanwhile, the unemployment rate fell to 4.2% from 4.3% last month, in line with expectations.
