Japanese GDP Data Economic data from Japan and China will be in focus on Monday, September 8, 2025. The recent resignation of Prime Minister Ishiba raises concerns about political instability, which may delay changes to the Bank of Japan’s interest rates. Following Ishiba’s exit, the yen weakened, and USD/JPY was trading around 148.10. The forex market indicated a negative shift in the yen due to the political situation. Japan’s GDP for the second quarter of 2025 is expected to hold steady at a growth rate of 0.3% from the previous quarter. This growth results from strong business investments and an improvement in exports, although rising inventories are a drag on GDP. For August 2025, China’s trade balance figures aren’t expected to show any major surprises. The ongoing truce in the US-China trade war has kept tariffs stable, and there have been no significant changes in trade relations over the past month. Ishiba’s resignation is the main event, creating political uncertainty that will influence our strategy. This development suggests that any potential interest rate hikes from the Bank of Japan may be postponed, likely putting additional downward pressure on the yen. Therefore, USD/JPY is likely to trend higher. Trading Strategy Traders should prepare for increased volatility in the Japanese yen. In past instances of political uncertainty in 2023 and 2024, volatility for USD/JPY options surged by 15-20%. We should consider one-month call options on USD/JPY to benefit from further yen weakness. With USD/JPY rising to about 148.10, the next target is clearly 150, which is a significant threshold. We should recall the Ministry of Finance’s currency interventions in late 2022 when the pair hit 150 to stabilize the yen. Any movement toward this level could trigger official warnings or actions, limiting potential gains. The upcoming Japanese GDP data is less important under the current circumstances. If GDP growth matches the expected 0.3%, it will likely fade into the background against the political turmoil. Only a substantial surprise in GDP growth could disrupt the current trend of a weaker yen. Meanwhile, the trade data from China for August is likely to contribute to regional stability. Given the continuing US-China trade truce, the market has adjusted to monthly surpluses between $70 billion and $85 billion. A figure falling within this range will likely be seen as a non-event by currency traders. Create your live VT Markets account and start trading now.

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