A surprisingly soft fourth quarter GDP release from Japan is only adding to the bearish story for the Yen, economists at ING say.

Yen negatives build

Japan released some surprisingly weak fourth quarter GDP figures for 2023. Even though USD/JPY has not moved much, these would seem to be Yen negative in that i) it provides fewer reasons for the Bank of Japan to exit its super-loose policy settings in April, and ii) given that exports were the main engine of growth, Japanese authorities may not be averse to a weak/weaker Yen after all. 

The 152.00 area is clearly a big resistance level for USD/JPY – a break that will have some dusting-off calls for 160.00. 

We do not think USD/JPY is particularly stable in this 150.00-152.00 area and feel that implied volatility levels are too cheap.