THE TAKEAWAY: Merchandise Trade Balance Fell to -¥ 82.6 Billion from ¥ 29.4 Billion > Traders Trader Reaction Muted as Improving Export Data Was Neutralized by a Jump in Imports > USDJPY Traded Sideways.
Data released by the Ministry of Finance and the Customs Office showed that the merchandise trade balance in February fell to -82.6 billion Yen from 29.4 billion Yen. The figure surpassed the -223.2 billion Yen deficit that analysts expected. Additionally, trade exports rose 5.9 percent on the year, beating the 0.2 percent increase forecasted and improving upon the 2.7 percent decline the prior year.
The figures painted a rosier than expected picture of an export-dominated Japanese economy and jumped on bears who forecasted a smaller increase in the country’s export sector. Though the data was tempered by a 10.5 percent increase in imports, which passed the 7.0 percent expected, the export figure did show the market that Japanese exporters were not faring as poorly as analysts thought.
Exports performing better than expected detracted from evidence that the Bank of Japan would ramp up its stimulus efforts in the near future. However, unexpectedly high import data suggested the opposite.
After the data was published, traders initially bought USDJPY, pushing it down from ¥81.296 to ¥81.160, but quickly sold their positions, leading the Yen up to ¥81.300. The currency pair continued to trade sideways in the minutes following the release.