Forexpros – The euro rose against the yen on Tuesday as talk began to build that the Bank of Japan will move to stimulate the Japanese economy in wake of soft gross domestic product numbers released on Monday.
In Asian trading on Tuesday, EUR/JPY hit 96.84, up 0.27%, up from a low of 96.55 and off a high of 96.86.
The pair sought to test support at 96.55, the earlier low, and resistance at 96.86, the earlier high.
Japan reported on Monday that its gross domestic product grew less than expected in the second quarter, expanding 0.3% according to preliminary figures, below market forecasts for 0.6% and well below the first quarter’s rate of 1.3%.
The data sparked talk the Bank of Japan may renew stimulus policies to boost its economy.
The minutes from the Bank of Japan’s most recent monetary policy meeting also revealed stimulus may be more increasingly likely
Markets have long expected that the European Central Bank and the U.S. Federal Reserve will stimulate their respective economies with easing measures, though the Bank of Japan had been viewed as one with a little more room to adopt a wait-and-see attitude longer than its western counterparts.
Easing measures, namely bond buybacks from banks or government debt purchases made in the open market, weaken paper currencies, and soft Japanese growth data rekindled talk monetary policy authorities will move in the near future.
Meanwhile, Japan’s tertiary industry activity index, which measures the change in the total value of services purchased by businesses, rose unexpectedly in July, which offset the yen’s decline.
The index rose to a seasonally adjusted 0.1%, from 0.9% in June month whose figure was revised up from 0.7%.
Analysts had expected Japanese tertiary industry activity index to contract by 0.3% last month.
The euro, meanwhile, was up against the pound and up against the Canadian dollar, with EUR/GBP trading up 0.11% at 0.7871 and EUR/CAD trading up 0.04% at 1.2248.
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