Japan trade surplus continues to arouse the envy of its commercial partners. Maintained at 10 years high, Japan trade balance given at JPY 797.3 billion (USD 7.51 billion) continues to expand, though trade tensions started earlier in the year with the United States. Japan trade surplus also benefitted from intensified trade with its Asian partners, equivalent to JPY 1’005 billion, a level not seen in eight years (5 years average: JPY 255 billion). Accordingly, trade surplus with the US, its second commercial partner after China, slightly decreased at JPY 623.10, a level maintained slightly above its 5 years average.
On the other hand, March exports growth have drastically fallen, valued at 2.10% (consensus: 5.20%), hampered by a decline in mineral fuels, transport equipment and raw materials. Imports endured the same downtrend, decreasing by -0.60% (prior: 16.60%) as shipments from China and Hong Kong slowed down amid US-China confrontation. Decline is felt in electric components, food and manufactured goods.
From a general perspective, yen appreciation since February 2018 remains a big hurdle for Japanese competitiveness (USD/JPY and EUR/JPY -4.73% and -1.89% year to date) and export potential. We remain confident that exports already reaching January lows are not expected to decrease further as the currency impact currently affecting its value in foreign currency is forecasted to decline for the periods to come.
USD/JPY ascension started in March 25th continues, approaching hourly resistance at 107.90 (14/02/2018 high) and heading higher, along the 107.40 in the short-term
By Vincent Mivelaz