Japanese Merchandise Trade Balance Deficit Widens as Industries Continue Facing Hardships

A continued decline in Japanese exports confirms additional difficulties in rebuilding faced by Japanese industries after March’s Tohoku Earthquakes. The decline in exports may prompt support for additional rebuilding funding from the government, though the Bank of Japan has remained ambivalent towards providing more liquidity injections. Despite the fall in merchandise exports, a higher level of imports showed that Japan was still largely relying on trading partners for goods as its economy recovers.

Japanese Merchandise Trade Balance. Chart generated with Bloomberg LP Professional Terminal.

The Japanese yen weakened against the US dollar immediately after the report as the growing deficit prompted investors to seek haven in the more liquid greenback. Despite the weaker Japanese data, attention still remains towards Europe for new developments as European finance ministers failed to agree on a comprehensive plan for Greek debt.

USDJPY 5 minute chart; vertical line indicates time of data release. Chart generated with FXCM Strategy Trader.