Talking Points:
- Yen unmoved by July’s better-than-expected trade balance figures
- Japanese exports rose 13.4%, beating forecasts of a 13.2% increase
- Trade with the EU and the US weakened compared with June data
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The Japanese Yen was little-changed following better-than-expected trade balance figures for the month of July. The trade surplus narrowed to ¥418.8 billion. Analysts expected a larger drop to ¥327.1 billion. The seasonally adjusted measure proved to be even rosier, posting the largest one-month gain since February to print at ¥337.4 billion.
Exports added by 13.4 percent, topping expectations, while imports undershot analysts’ projections but still posted an improvement over the prior month. Looking at Japan’s key trading partners, sales to the US rose at a weaker pace than the prior month while those to Europe fell by a full percentage point.
The currency’s tepid reaction to the data may have reflected traders’ focus on its role within larger global risk sentiment dynamics, as noted in this week’s Yen forecast. Indeed, the Japanese unit had been rising against the backdrop of US shares’ sharp retreat from intraday highs and seemed too preoccupied with that to offer a discrete response to local statistics.
