Yen Surge Driven by Robust Japanese GDP, Dollar Stumbles Amid U.S. Economic Concerns

The yen surged against the dollar after stronger-than-expected Japanese GDP figures, which fueled expectations for more rate hikes by the Bank of Japan. Meanwhile, the dollar struggled due to weak U.S. economic data. Elsewhere, the Australian and New Zealand dollars also gained, awaiting policy decisions from respective central banks.

The yen saw a significant increase against the dollar on Monday, buoyed by Japan's surprisingly strong GDP growth data. This growth spurred expectations of imminent rate hikes by the Bank of Japan as consumption and business spending improved more than anticipated in the fourth quarter.

Meanwhile, traders are reacting to weaker-than-expected U.S. economic data, prompting a re-evaluation and increased bets on impending Federal Reserve rate cuts. The dollar, finding itself on the defensive, struggled after recent sell-offs linked to weak U.S. retail sales figures, holding back its recovery.

As geopolitical tensions remain, with dialogues on the Russian-Ukraine conflict anticipated in Saudi Arabia, both the Australian and New Zealand dollars mirrored the yen's ascent. Investors now await important monetary policy decisions from the respective central banks, potentially introducing rate adjustments.

(With inputs from agencies.)