Even as the Bank of Japan’s Kuroda flip flops on the relative strength or weakness of exchange rates, the real economy, the situation is deteriorating quickly as the stimulus from a less expensive Yen quickly vanishes. A look at the overnight trade balance figures highlights this point after export growth slowed from an 8.00% annualized pace to just 2.40%, missing expectations of 3.50% expansion. Imports faced an even steeper drop as the relative expensiveness grew on the back of a weaker local currency, sliding -8.70% after contracting at a -4.20% annualized pace during the last reading. This release is largely in-line with developments in other export focused economies like China and Australia as global trade continues to falter and shrink. The USDJPY currency pair continues to trend sideways as the Bank of Japan is forced to reconsider its policy tools for meeting the inflation target.
Japanese Economic Momentum Cools
Daily Analysis - 17/06/2015