Japan's 2Q GDP rose to +0.9% and the annualized rate came in at +3.8%, both of which were in line with market expectations. The Price Index though, fell to -0.5% which was lower than forecasts of -0.3% and suggests that the desired inflationary effect is still not being felt. USD/JPY, which had been higher prior to the open on news that Tokyo had won the bid to host the 2020 Olympics, dipped a bit on this data. PM Abe, who is keen on raising the sales tax which would then allow him to cut corporate sector taxes and possibly allow the BOJ to ease further should they choose to do so, has been out today putting a positive spin on these events.
Last week began with encouraging economic data which suggested that positive growth momentum was building both in Europe and the US. However, this enthusiasm was tempered a bit by Draghi's extremely cautious and dovish press conference on Thursday and the disappointing US employment report on Friday. The belief is that the FED will probably still decide to taper at the September meeting but it will likely take the form of smaller reductions in the pace of purchases and enhanced forward guidance.