Article Highlights

  • Japan’s bank lending pops up by 2.5% vs. 2.7% expected, 2.6% previous
  • Japan’s current account surplus clocks in at 1.11T JPY in December vs. 1.42T JPY in November
  • Japan’s Economy Watchers sentiment dips from 51.4 to 49.8 vs. 51.9 expected
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Ho-hum. Forex price action was a mixed bag of nuts, as a lack of catalysts failed to produce strong intraday trends for the major currencies.

Major Events:

Japan’s current account surplus – Data released from the world’s third largest economy revealed the biggest annual current account surplus since the last global financial crisis. For newbies out there, you should know that the report covers trade in both goods and services as well as tourism and returns on foreign investment.

Japan’s current account surplus clocked in at 20.65T JPY in 2016, the highest since the 25.0T JPY reading in 2007. Not only that, but it also marks a 25% growth from 2015 as well as the first time Japan posted a surplus in goods and services since the Fukushima debacle in 2011.

The report put Japan on a sticky situation ahead of Trump’s meeting with Shinzo Abe this weekend. See, a report printed earlier this week reflected the U.S. running its second largest trading deficit with Japan just behind China. If you recall, Trump has been calling out Uncle Sam’s major trading partners lately, accusing them of currency manipulation and unfair trade practices.

Mixed risk sentiment – Asian equities capped the session with mixed results, as a lack of catalysts kept traders on the sidelines.

Nikkei closed 0.11% higher despite a stronger yen and uncertainty ahead of Shinzo Abe’s meeting with Trump this weekend. Australia’s A SX 200 also popped up by 0.56% thanks to equity traders catching up to the RBA’s optimism from yesterday.

China’s markets failed to catch the bullish train though, with the Shanghai index slipping by 0.32% and Hang Seng dipping by 0.09% on political uncertainty from the euro zone and the U.S.

Major Market Movers:

EUR – The common currency slipped across the board, as Asian session forex traders caught up to jitters over Grexit and the upcoming French elections.

EUR/USD only dipped by 7 pips (-0.07%) to 1.0689, EUR/JPY fell by 18 pips (-0.15%) to 119.78, and EUR/CHF slipped by another 3 pips (-0.03%) to 1.0655.

JPY – A bit of risk aversion pushed the yen higher early in the session, but optimism over Japan’s current account surplus and easing concerns over Abe’s weekend meeting with Trump eventually dragged it back down.

USD/JPY fell to a session low of 112.04 before climbing back up to 112.06, EUR/JPY slipped to 119.75 before closing at 119.78m and GBP/JPY recovered from its 140.07 lows to trade at 140.13.

Watch Out For:

  • 8:30 am GMT: Bank of France business sentiment report (103 expected, 102 previous)

See also:

U.S. Session Recap
London Session Recap

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