Back
21 Feb 2014
Flash: Japan's record trade deficit to weaken the Yen further - Nomura
FXStreet (Bali) - The soft Japanese trade balance from Thursday suggests the JPY weakness trend will likely continue, notes Yujiro Goto, FX Strategist at Nomura.
January trade deficits widened further, once again recording the biggest deficits ever. The trade balance before seasonal adjustment was a deficit of JPY2790bn ($27.2bn), while the deficit reached JPY1819bn ($17.8bn) after seasonal adjustment.
As the trade deficit during the first 20 days of January had already exceeded JPY2000bn, the increase in the trade deficit in January was well anticipated. Nonetheless, the actual trade deficit reported today was even worse than consensus expectations (JPY2487bn and JPY1510bn respectively)."
"If weak exports continue for long while the US economy is entering a mini inventory adjustment and Chinese data disappoint, policymakers may become more dovish. Thus, exports dynamics will be important for the timing of possible policy responses (supplementary budget and monetary easing)."
"Market reactions to the weak trade balance were muted, but the data again suggest Japanese corporate flows remain significant JPY negative."
"Furthermore, subdued exports somewhat increase the possibility of policy responses going forward. Overall, the weaker-than-expected trade balance suggests the JPY weakness trend is likely to continue."
January trade deficits widened further, once again recording the biggest deficits ever. The trade balance before seasonal adjustment was a deficit of JPY2790bn ($27.2bn), while the deficit reached JPY1819bn ($17.8bn) after seasonal adjustment.
As the trade deficit during the first 20 days of January had already exceeded JPY2000bn, the increase in the trade deficit in January was well anticipated. Nonetheless, the actual trade deficit reported today was even worse than consensus expectations (JPY2487bn and JPY1510bn respectively)."
"If weak exports continue for long while the US economy is entering a mini inventory adjustment and Chinese data disappoint, policymakers may become more dovish. Thus, exports dynamics will be important for the timing of possible policy responses (supplementary budget and monetary easing)."
"Market reactions to the weak trade balance were muted, but the data again suggest Japanese corporate flows remain significant JPY negative."
"Furthermore, subdued exports somewhat increase the possibility of policy responses going forward. Overall, the weaker-than-expected trade balance suggests the JPY weakness trend is likely to continue."