A pretty busy week for Japan’s calendar, which has trade balance, manufacturing PMI, AND a BOJ statement penciled in. Check it!
Trade balance (June 19, 12:50 am GMT)
Japan’s trade surplus narrowed sharply from 528B JPY in March to 60B JPY in April. This is lower than the 203B JPY surplus that many had expected and waaaay lower than the 621B JPY surplus seen in the same month last year.
A closer look revealed that exports had gone down by another 2.4% from a year earlier thanks to weaker global demand and uncertainty over the U.S.-China trade war. Imports rose by 6.4%, though, led by transport equipment, aircraft, and foodstuff.
Interestingly, the yen actually GAINED pips as global trade concerns increased demand for the low-yielding currency.
This week analysts expect to see a surplus of 60.4B JPY for the month of May, with exports probably falling by another 7.7% and imports likely rising by 0.2%.
A much narrower trade surplus or even a trade deficit could worsen trade war concerns and strengthen the yen, while a much better than expected trade report could push higher-yielding currencies higher.
BOJ’s policy statement (June 20, Asian session)
As expected, the Bank of Japan (BOJ) kept its policies steady for another month in May.
In pressers that followed, Governor Kuroda hinted that he and his team shared that they will likely keep rates low for at least another year and hinted that they could combine their tools if the economy needed more stimulus.
As dovish as the statements were, the decision didn’t have much impact on the yen’s prices. Instead, traders had focused on reports that China’s central bank might be pausing its reserve ratio cuts, which could slow down the global economy.
This week analysts aren’t expecting any changes from Kuroda and his team. That doesn’t mean that you shouldn’t pay attention to the event, though!
Aside from the timing of any policy changes, keep your eyes peeled for the BOJ’s main concerns, as well as its potential tools in case the members do need to step up their stimulus game.
Missed last week’s price action? Read JPY’s price recap for June 10 – 14!