JPY: Disappointing economic data likely to force Japan into technical recession – MUFG

By FXStreet FXStreet (Delhi) – Lee Hardman, Currency Analyst at MUFG, notes that the release overnight of the weaker than expected trade report from Japan for September has provided further evidence of disappointing economic growth momentum reinforcing expectations that Japan’s economy may have fallen into technical recession in Q3.

Key Quotes

“The yen has weakened modestly in the Asian trading with USD/JPY rising back above the 120.00-level after testing support again last week from its 55-week moving average at around 119.70. The yen is likely to trade on the defensive ahead of the BoJ’s upcoming policy meeting on the 30th October.”

“The report revealed that the annual rate of export growth slowed to just 0.6% in September which was the weakest reading since August of last year. Weakness is most evident in exports to Asia and China which have contracted by annual rates of -0.9% and -3.5% respectively. The sharp decline in commodity prices and weakening of domestic demand has resulted in imports contracting sharply by an annual rate of -11.1%. The trade deficit has widened modestly in Q3 acting as drag on growth.”

“However, the trade report is unlikely to materially shift the BoJ’s policy thinking in favour of further easing at the end of …read more

Source:: FX Street