Asia Recap: Japan's Q2 GDP sees sharpest decline since 2011 quake

By FXstreet.com | Updated August 13, 2014 AAA

FXStreet (Bali) - A sleepy Asian session, with the Aussie retaining a slightly firmer tone following better-than-expected Australian consumer sentiment, with the rest of currencies consolidating in tight ranges ahead of a busy European session for EUR and GBP.

In terms of fundamentals, Japan's Q2 GDP (preliminary) came at -1.7% q/q (seasonally adjusted) vs -1.8% q/q expected, reflecting the current economic struggles following the sales tax to 8% from 5% in early April this year. To put things into perspective, today's growth figures represent the largest decline since early 2011, when a major earthquake hit the country.

Also in Japan, the BoJ published its monetary policy minutes, and as expected, no changes in language were observed, with the Central Bank still committed to conduct money market operations so that the monetary base will increase at an annual pace of about 60-70 tr yen.

As per the prospects of further quantitative and qualitative monetary easing (QQE), the BoJ said, "it has been exerting its intended effects, and the Bank will continue with the QQE, aiming to achieve the price stability target of 2 percent, as long as it is necessary for maintaining that target in a stable manner. It will examine both upside and downside risks to economic activity and prices, and make adjustments as appropriate."

In Australia, the Westpac consumer confidence index (seasonally adjusted) for August came at +3.8% m/m vs +1.9% last, helping the Australian Dollar to test offers at USD 0.9285. Also in Australia, Q2 wage cost index came at +0.6% q/q vs +0.7% expected.

In China, M2 money supply (YoY) came at 13.5% (July) vs previous 14.7%, with new loans falling from previous ¥1080B to ¥385.2 in July. Further key Chinese releases are due at 5.30 GMT, including urban investment, industrial production and retail Sales, likely to be an AUD mover.

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