A Deutsche Bank analyst said improving Japanese fundamentals point to a modest yen appreciation. Japan's Q2 real GDP rose 0.3% q/q, below expectations; nominal GDP rose 1.2% q/q, implying aggregate inflation above forecasts. The analyst said stronger nominal growth could increase pressure on the Bank of Japan to tighten policy in September or October, which would support the yen. Fiscal concerns appear overstated — Japan is among the G10 with one of the smallest budget deficits — and higher nomi

A Deutsche Bank analyst said improving Japanese fundamentals point to a modest yen appreciation. Japan's Q2 real GDP rose 0.3% q/q, below expectations; nominal GDP rose 1.2% q/q, implying aggregate inflation above forecasts. The analyst said stronger nominal growth could increase pressure on the Bank of Japan to tighten policy in September or October, which would support the yen. Fiscal concerns appear overstated — Japan is among the G10 with one of the smallest budget deficits — and higher nominal growth should boost tax revenue and improve the fiscal balance.