Japanese Yen Rides Trade Disappointment, USD/JPY Still Wilting

Talking Points:

• Japan’s trade surplus missed expectations quite badly for November
• So did the overall current account balance -although that did post a 41st straight surplus
• However the markets took little head, with Japanese Yen trade focused on the US Dollar

What do retail traders’ bets tell us about Japanese Yen expectations? Find out right here.

The Japanese Yen was steady Friday despite a rather disappointing set of trade numbers from its homeland.

December’s trade balance delivered a surplus of JPY181 billion (US$1.63 billion). That was well below both the JPY310.6 billion expected and October’s 430.2 billion. The overall current account balance for November was JPY 1,347.3 billion, again below the expected print which was 1,836.1 billion. It did manage a 41st straight surplus though.

Disappointing numbers have been quite rare out of Japan in recent months, with the country’s economy benefitting from both a revival in global trade and some signs of domestic demand pickup- even though inflation remains very weak.

These latest figures were not terrible, trade data can often be volatile and the forecasters may simply have got a little ahead of themselves. All the same, Japan’s trade position is often seen as a proxy for global business appetite so this series may now bear a little more scrutiny as the data begin to cover December and the early months of this year.

For now they largely passed by a Japanese Yen market still focused on broader currency moves.

On its daily chart the Japanese Yen remains in the ascendant against the US Dollar. The fundamental backdrop for this came earlier this week when a modest trimming of scheduled bond buying by the Bank of Japan was interpreted by the market as a possible sign of stimulus withdrawal ahead. Whether or not it actually was any such thing is a very moot point. However, the US Dollar remains under a little duress as investors look toward stronger global growth.

USD/JPY has slipped, as it looked likely to do following the consolidation period marked on the chart. Now support at late November’s lows in the 111.10 region is in clear view. Should those give way then the climb up from September’s lows will come into uncomfortable focus for US Dollar bulls.

--- Written by David Cottle, DailyFX Research

Contact and follow David on Twitter: @DavidCottleFX