The Japanese yen rose in Asian trading on Friday against a basket of major and minor currencies, resuming gains that had briefly paused yesterday against the US dollar, moving again toward a three-week high. The rise came after stronger-than-expected data on Japans economic growth the worlds fourth-largest economy.

The data boosted expectations that the Bank of Japan could raise interest rates by 25 basis points in September, pending more upcoming releases on inflation, wages, and unemployment.

Price Action

USD/JPY fell about 0.4% to 147.20 from todays opening at 147.75, after hitting a session high of 147.87.

On Thursday, the yen ended down 0.25% against the dollar, its first decline in three days, after earlier touching a three-week high at 146.21.

Aside from profit-taking, yen levels weakened alongside most other major and minor currencies after strong US Producer Price Index data.

Japanese Economy

Preliminary GDP figures showed Japans economy grew 0.3% in Q2 2025, above market forecasts of 0.1% growth. The economy posted flat growth (0.0%) in Q1.

The stronger-than-expected GDP reading came despite Japans struggle with an unstable trade environment in Q2, with a trade deal with the US only reached on July 23. Under this deal, Japan faces a blanket 15% tariff on all exports to the US, including cars.

Interest Rate Outlook

Following the GDP data, market pricing for a September BoJ rate hike of 25 basis points rose from 38% to 45%.

Investors await more data on inflation, unemployment, and wages to refine those expectations.

Minutes from the BoJs June policy meeting showed some board members would consider resuming rate hikes if trade tensions eased.