The yen continues to ease as both fundamentals and technicals are aligning against the Japanese currency. Below is part I of II discussing the fundamentals of the yen and the Japanese economy
Yesterday the Bank of Japan meeting minutes from the April 28th meeting showed a single board member, Deputy Governor Kiyohiko Nishimura, came out in favor of additional credit easing to aid the Japanese economic recovery. Nishimura said, “The need for additional momentary easing had increased, taking into account the current outlook for the economy and prices”.
Exports declined 12.5% for a year-over-year decline in April. The number was in-line with consensus forecasts for a decline of 12.4%. Due to the drop in exports the trade balance fell to a deficit of -463.7B JPY. This is the first deficit in 3-months.
Earlier in the week the BoJ issued a negative economic assessment. The report for the month of May shows production has fallen and domestic private demand continues to weaken following the earthquake and tsunami on March 11.
Q1 GDP contracted by 3.7% on an annualized basis.
Fundamentals point to a potential easing of monetary policy and a weakening economic position, all negatives for the Japanese yen.
Click here to read Part II, technical analysis of the USD/JPY.
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Russell Glaser is a Currency Analyst with ForexYard. Russell provides analysis in the FX spot market by employing fundamental research methodologies. In addition to currencies, Russell closely follows the correlation between the Commodities market and the movement of equities. His writings have been published on the ForexYard Trading Blog and associated partner sites. Prior to joining Forexyard, Russell Glaser served as a management consultant in the financial services industry, advising Fortune 100 companies. Russell holds a degree in finance from the Fisher College of Business at The Ohio State University.
