Japan’s economy shows solid growth

The US dollar rebounded from lows against the Japanese yen. Now traders are going long on the dollar/yen pair. Today, Japan surprised markets by reporting its fastest pace of economic growth in a year in the first quarter. It drops a hint that the Bank of Japan is unlikely to adopt extra measures to soften monetary policy. The dollar/yen pair is now trading at the level of 109.46, up from an intraday low of 108.80. Currency strategists note that traders are encouraged by macroeconomic statistics published in the US yesterday. A series of positive indicators proves solid economic growth. Today, the Federal Open Market Committee is due to release the minutes of its latest meeting. It will allow analysts to make a more accurate forecast of the US economy and will shed light on the timing of the next rates hike. Earlier, investors were ready for a new round of stimulus measures from the Bank of Japan, but they had to revise the situation due to flash GDP data from Japan. According to the flash estimates, Japan’s GDP grew 0.4% on a quarterly basis against a poll forecast of a 0.1% quarterly gain. In annual terms, GDP expanded 1.7% in the first quarter. This is a notable recovery from a 1.7% contraction in the final quarter of 2015. Currency experts assume the US dollar appreciation against the yen to be short-lived. Indeed, investors are focused on the pending minutes of the US rate-setting committee. So, the dollar/yen pair could decline to the level of 109.00 in the late session.