The news out of Japan is positive. Its annualized quarterly growth came in much higher than expected surprising markets and investors alike.

Real gross domestic product (GDP) for the January-March period expanded an annualized 1.7 percent against expectations of a 0.2 percent rise. On a quarterly basis, GDP grew 0.4 percent against a poll forecast of a 0.1 percent quarterly gain.

The yen remained steady against the dollar on the news, but later gave up most of its gains after investors noticed that some of the details of the GDP report were not as positive as should be expected and on concerns that additional stimulus is needed to keep growth moving.

According to Ayako Sera, market strategist at Sumitomo Trust and Banking, “The yen strengthened a bit because growth was stronger than many had expected. But looking at the details, there were still some concerning areas, including capital spending.”

The new data indicated that Japan is making progress towards beating deflation but pointed out that private consumption remained weak despite the sales tax that had been increased in 2014. The BOJ left policy unchanged at its last meeting, but analyst believe additional easing steps may be brought into play as early as next month.

u.s. Dollar Down

The news sent the dollar down as low as 108.73 yen but it climbed back to a session high of 109.39 yen. Overnight, the U.S. currency spiked briefly to 109.65 yen, its highest since April 28, following a report that showed U.S. consumer prices rose more than it had in three years in April. But it slipped again as U.S. equities wilted and Treasury bond yields fell.