- Kiichi Murashima, chief economist at Citigroup Inc.
The Japanese Yen was still trading around 101.48 against the Greenback on Thursday, neglecting trade figures from the world's third largest economy. There is a strong support located at a recent low around 101.42, represented by a lower boundary of the channel up pattern. The pair is unlikely to penetrate this level any time soon, as 70% of traders are holding long positions, expecting the Buck to continue appreciating against the Yen.
A report from Ministry of Finance was the first part of this week's data, with the inflation report on the radar. The nation's trade gap shrank to 822.2 billion yen in June from 909 billion a month earlier. Analysts expected a shortfall of 665 billion over the observed period. At the same time, exports fell 2%, while imports climbed 8.4% both on a yearly basis. Figures may not be encouraging, however, they neither can be considered as a cause for concern. Exports remain lacklustre, even despite stronger growth in the U.S., pointing at a lack of competitiveness. At the same time, imports of electrical machinery are still rising, suggesting the trade balance will stay in the red. According to some economists, falling global energy prices and a restart of the nation's nuclear reactors will reduce the import bill in the foreseeable future. The only worrying sign is that persistent deficit makes Japan dependent on its foreign creditors– a serious risk especially keeping in mind Japan's enormous public debt.
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