While most analysts projected sustained growth for the Japanese export economy, trade encountered headwinds during January after exports grew by a meager 1.30% compared to the consensus estimate of 4.70% expansion. This contrasts sharply with the 5.40% annualized pace of increase in December while growth in trade came from the import side of the equation.
During the same annualized period, imports rose by 8.50%, surging beyond projections of 4.70% and well above the -2.60% contraction reported a month earlier. Import growth outpacing the rise in exports brought the trade deficit to JPY -1.087 trillion for the period, marking the lowest point in the figure in 24-months. However, import growth is positive and may be a strong catalyst for inflation gains in the coming months if the trend persists. After sliding on Friday, USDJPY is back on the climb following the data.