2014.08.1301:23:14UTC+00Japanese yen stabilizes on GDP contraction

The Japanese yen held steady against the US dollar Wednesday as the currency reacted limitedly to contraction in Japan’s economy in the 2nd quarter.

Japan’s economy declined an annualized 6.8% in the 2nd quarter, enduring its largest constriction since March 2011 earthquake, as sales tax hike took a heavy toll on household spending.

The yen was trading near ¥102.30 to the US dollar, between ¥103.15 and ¥101.51 in the last couple of week. Against the euro, the currency was also stable at ¥136.69, above an 8 ½ month low of ¥135.73 hit last week.

"Overall the contents weren't enough to increase the possibility of additional BOJ monetary easing or to lower the economic outlook for July-September onwards," said Shinichiro Kadota, Chief Japan FX Strategist at Barclays Bank.

Bank of Japan Governor Haruhiko Kuroda seemed upbeat on the economic outlook last week following Japan’s central bank retained its policy, underpinning its conviction no fresh near-term stimulus was needed to eradicate the effects of a sales tax hike in April.