According to latest data released by the Cabinet Office, the Japanese economy posted a stronger than expected growth between July and September, boosted by strong domestic demand and business spending. Japan’s GDP for July-September came in at 1.8% YoY, posting a far better growth than the prelim reading of 0.2% annualised growth.

The GDP grew for the fourth straight quarter and beat economists’ forecasts, which was for a reading of +0.7% for this period. While the GDP growth was boosted by robust private consumption and increased capex spending by businesses, analysts have cautioned that Japan’s economy could see weaker growth in the quarters ahead.

One of the key factors for this cautious attitude is the recent sales tax hike that has had a more severe impact on private consumption than anticipated. This could impact domestic demand and production, and possibly impact the GDP as well into 2020.

Following the release of this news, USD/JPY saw a sharp slide lower, but has since steadied itself. The Guppy is trading at around 108.56 at the time of writing.