USD/JPY retraces recent losses, moving above 150.50

• USD/JPY experiences challenges on weaker Japan’s economic data.

• Japan’s GDP declined by 0.5% in Q3 against the previous growth of 1.2%.

• Japanese Economy Minister Yasutoshi Nishimura warned about the impact of a global slowdown on Japan’s GDP.

• Weaker US inflation reinforces the prevailing sentiment of concluding the rate-hike cycle by the Fed.

USD/JPY recovers recent losses registered in the previous session following the release of weak US inflation data. However, the pair traded higher around 150.60 during the Asian session on Wednesday.

The Japanese yen (JPY) faces challenges as Japan’s primary gross domestic product (GDP) fell 0.5% for Q3, hanging from a 1.2% increase in the previous quarter. Annual GDP for the said period contracted by 2.1% against a previous growth of 4.8%.

Japanese Economy Minister Yasutoshi Nishimura issued a warning about the potential impact of the global recession on Japan’s Q3 GDP. Nishimura highlighted that domestic demand, including consumption and capital spending, lacked strength in the third quarter.

Moreover, the Bank of Japan (BoJ) cut its holdings of five- to 10-year Japanese government bonds (JGBs) to ¥575 billion from the previous ¥675 billion. Additionally, one- to three-year JGBs were adjusted to ¥375 billion from the previous ¥425 billion.

On the other hand, the reaction to the weak US inflation data was certainly influential, reinforcing the prevailing sentiment that the US Federal Reserve (Fed) is likely to refrain from raising interest rates in future meetings. This has impacted US Treasury yields, adding pressure on the US dollar (USD).

The US Bureau of Labor Statistics (BLS) released a Consumer Price Index (CPI) for October that was lower than expected, with the annual rate falling to 3.2%, down from an expected 3.3%. US core CPI recorded a moderate increase of 0.2%, below the expected 0.3%.

US Producer Price Index and Retail Sales data are scheduled to be released later in the North American session. If these figures align with expectations, it could further amplify the pressure on the Greenback.