In addition to the momentum towards reform, analysts say the economic numbers coming out of Japan lately have been surprisingly good, which also supports the yen. According to the Japanese Cabinet Office’s initial preliminary estimates, Japan’s second-quarter real gross domestic product (GDP) grew 1.1 percent quarter-over-quarter annually. The reading marked the third straight quarter of positive gains.
On the consumer front, retail sales have been surprisingly on the upside. In June, sales jumped for the fourth month in a row, with a 3.1 percent year-over-year gain.
“The Japanese economy is doing really well,” says Tony Hughes, senior economist at Economy.com. “Real wages have started to rise and this is feeding into domestic demand, which is a great development and should spell the end for deflation.”
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