Talking Points

• USD/JPYremains focused on Trump and the “USD” side of the pair
• News that Japan’s trade surplus remained steady wasn’t enough to deflect attention
• However, the surplus missed forecasts substantially

TheJapanese Yenremained under pressure against a “Trump-trade” supportedUS Dollar, reacting little to news that Japan’s trade surplus remained broadly stable even though markets had expected a rise.

The Ministry of Finance reported a merchandise trade surplus of 496.2 billion yen ($4.5 billion) in October, just below September’s 498.3 billion Yen figure.

Japanese exports fell 10.3% in the twelve months through October, with imports down 16.5%.

The trade picture has brightened a little in recent months. A weaker Yen has probably played a part in the revival of manufacturing output for export.

However, international demand levels remain subdued by historical standards, and Tokyo is keen to spur domestic consumption. This combination may mean that the surplus has further to fall.

Yen markets remain more focused on Donald Trump’s victory in the US presidential election however, which has tended to mean a stronger US Dollar in the days since. This is perhaps a little surprising given that the surplus was well below the 614 billion yen which economists had been expecting.

Still, the Yen endured a second straight week of falls against the greenback last week and that trend looks set to endure, even if it slows a little in the near term as US markets break for Thanksgiving.

USD/JPY was 110.95 after the data, from 110.81 just before.

USD/JPY: Clear uptrend