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JAPAN IN RECESSION: USDJPY & NIKKEI SLUMP

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JAPAN IN RECESSION: USDJPY & NIKKEI SLUMP

Nov 17 2014, 9.20am GMT

STOCK.com

Japan’s Q3 GDP figures spell recession for the world’s third largest economy.

Q3 GDP -0.4% q/q, -1.6% AR, +0.5% and +2.1% eyed.

This Gross Domestic Product figure followed second quarter contraction data of 7.3% [revised], the largest slump since Japan’s tragic earthquake and tsunami in March 2011.

Q3 CAPEX -0.2% q/q, consumption +0.4%, housing -6.7%, deflator +2.1% y/y.

The Capital Expenditure figure demonstrated the fall in business spending and consumption due to the first consumptive tax increase in April. Even announcements of delaying the second tax hike could not stop the economic downfall as inventories building up against a lack of domestic sales. With the demographics problem of an aging population growing year on year, this is not expected to get better.

USDJPY crashed cruising through resistance levels of 117.00 to 117.06, though the pair has seen a correction and another rise since. With a close relationship between USDJPY and Japanese equities, investors tend to sell the yen to hedge positions, thereby taking stocks down with them.

Nikkei 225 slumped on a stock average down by 2.6%. Down over 450pts and to just under-17k.

Charts from MT4 – Nikkei, USDJPY

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