- Japanese machine orders fell unexpectedly in May, falling by 3.6% on the month
- Current account data were far more in line with market hopes
- The Yen barely moved, with the market sensing no monetary implications
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They slipped 3.6% on the month in May, hugely worse than both the 1.7% gain markets expected and April’s 3.1% fall. The annualized rise was just 0.6% when the markets had hoped for a 7.6% gain. These are woeful figures and, as indicators of planned capital expenditure over a six-nine-month horizon, they make unsettling reading. However, this is a notably volatile series. Expect very close attention on the June release as investors will want to see whether a weakening trend is setting in. The Japanese Cabinet Office which compiles the data said that order growth appeared to be stalling.
Official trade data released at the same time were more mixed. May’s current account balance was a surplus of JPY1653.9 billion (US$14.52 billion), somewhat lower than the JPY1792 billion which markets were expecting. The trade balance on a balance of payments basis was much worse than expected, coming in at a deficit of JPY115.1 billion, much lower than the JPY45 billion gap expected.
Bank lending numbers were also released. They were as expected showing a rise of 3.3% on the year.
The Yen barely moved on these data, suggesting that investors see nothing here which will change the prognosis for Japanese monetary policy. Tokyo remains wedded to extraordinarily accommodative monetary policy and is thought likely to remain in that mode at least until consumer price inflation picks up durably.
Its last annualized gain was just 0.4%, way below the Bank of Japan’s 2% target. A poll released by Nippon News Network before the data put Prime Minister Shinzo Abe’s approval rating at its lowest ever, just 31.9%.
--- Written by David Cottle, DailyFX Research
Contact and follow David on Twitter:@DavidCottleFX