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Yen Steady, Equities Fall as Trade Balance Doesn’t Alter BoJ Policy Bets

Yen Steady, Equities Fall as Trade Balance Doesn’t Alter BoJ Policy Bets

Bradley Kearns, Contributor

Talking Points:

  • Yen was little moved by Japan’s trade figure failing to return to an expected surplus
  • The Nikkei 225 stock index opens lower after the trade figures miss expectations
  • With a BoJ due to meet next Friday on the anniversary of the QQE upgrade, stimulus speculation will remain a focus

The Japanese Yen posted a limited response as the Nikkei 225 stock index opened lower after the Asian economy’s trade figures disappointed. Japan’s trade balance for September printed an unexpected deficit of -¥114.5 Bln as compared to the ¥87.0 Bln surplus forecasted. While this gap was the smallest in three-month, it remains a weight to the trade-heavy economy. The adjusted total was a -¥355.7 Bln deficit versus the markets’ forecast of -¥63.4 Bln. Exports and imports totals were also released alongside the headline figures. The country’s exports grew 0.6 percent year-over-year. This is the slowest pace of growth in 12 months. Imports fell 11.1 percent over the same period.

While Japan’s trade balance came in lower than expected, the tepid reaction from the Yen may indicate this data will not materially alter the Bank of Japan’s (BoJ) monetary upcoming policy vote. As global growth trends cool and exacerbate tepid local conditions, the policy group’s struggle to hit its CPI objectives is even more tangible. There is still considerable speculation amongst economists and market participants that the group will respond to the economic shortcomings with further policy accommodation at its second October meeting on the 30th. The BoJ maintained its policy bearings October 7th targeting an increase in the monetary base by an annual pace of ¥80 trillion.


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