Japanese Exports Shrink on Falling Demand, Rising Yen

Japan’s Trade Balance registered a greater-than-expected deficit in November at 93.4 billion yen. The broader Current Account measure (which includes cross-border capital flows in addition to trade in goods) shrank to 581.2 billion yen. The surplus has contracted 65.9% from a year earlier as slumping economic performance around the world trimmed demand all the while an appreciating Yen made Japanese goods comparatively more expensive. Indeed, exports fell 26.5% in annualized terms. The Japanese Yen rose 29% through 2008 against an average of the world’s top-traded currencies. Although Japanese officials have not been as vocal about the exchange rate since USDJPY began to rise in mid-December, traders are likely to see renewed calls for intervention in the forex market the pair resumes its down trend. We sold USDJPY at 92.48 targeting 84.25.

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