Coming Up: January Japan Current Account

Forex is fundamentally governed by currency flows, and this is the best measure of actual value exchange for the entire economy.

Higher values are seen as positive for the currency since more value is leaving the country. Therefore there needs to be a compensating increase in capital flow to pay for it. Lower values are considered negative. This figure is extra important because Japan is a major source of carry trades.

The current account has been trickling down since July of last year, but it has remained positive since early 2014. This is December data, so it will undoubtedly be affected by the holidays.

Also, we had the trade balance from the same period reported on Jan 22, showing the third consecutive trade deficit, which will drag on the comprehensive, current account figure. Even so, last month’s number came in above expectations despite a much bigger trade deficit.

The consensus of expectations is for a current account surplus of ¥430B, which would be the lowest since the beginning of 2017 – hardly a good sign. However, this is non seasonally adjusted, and there is a significant swing in the winter months. But the bottom is usually not seen until March, and if the data comes in below ¥400B, it would be a bad start to the winter trend.

On the positive side, December saw the Japanese terms of trade jump nearly 3 points to 96.2, the first increase since the beginning of last year.

While this is still near the lowest it has been since 2014, there is some hope that the current account might surprise to the upside. And let’s not forget that if household spending is depressed, that implies fewer imports, which also supports a better current account.

1 2
View single page >> |

Disclaimer: Orbex LIMITED is a fully licensed and Regulated Cyprus Investment Firm (CIF) governed and supervised by the Cyprus Securities and Exchange Commission (CySEC) (License Number 124/10). ...

How did you like this article? Let us know so we can better customize your reading experience. Users' ratings are only visible to themselves.


Leave a comment to automatically be entered into our contest to win a free Echo Show.