Japan’s external trade deficit set a new monthly record in March. Weak export growth was the major reason why the trade balance figures weakened.
Export Data Disappoint
As of March 2014, the year-over-year export growth disappointed traders and investors. The actual readings reached 1,8% against the forecast of 6,5%. The forecast was made by 27 economists interviewed by Bloomberg.
At the same time, the import is growing at a record-high rate. In particular, Japan boosted its import by 18,1% m/m. This led to a new record in terms of a monthly trade balance deficit. The export drop turned out to be the biggest one since January 2013. Japanese exporters are currently being pressed by their counterparts from Taiwan and South Korea. Apart from that, Japanese consumers became more active in advance of a possible consumption tax hike, which forced Japanese exporters to reorient their sales activities to the domestic market to the prejudice of their exports.
At the same time, experts assume that the higher domestic demand for Japanese products is unlikely to support the GDP, which is expected to drop anyway, especially in conjunction with the mentioned consumption tax hike, Market Leader reports.
The export decline is also affecting the Japanese government’s efforts aimed at reviving the national economy after the start of tax reforms.
Trade Balance Figures to See Further Decline
Japan is seeing an import hike caused by possibly higher tax pressure on Japanese consumers amid higher energy import spending. This energy spending increased due to higher energy prices. So, experts believe the deficit is very likely to keep declining if the Japanese government doesn’t restart Japanese nuclear power plants.
Meanwhile, Masterforex-V Academy reports that the Japanese Yen keeps losing value against the US Dollar as USDJPY is rallying after a sharp drop seen in late March – early April. In particular, USDJP is forming an upswing represented by wave A/B o level H8 or higher, Masterforex-V Academy reports.
Therefore, the currency pair is probably forming sub-wave 4 inside a bigger scale upswing. A break above the local high located at 102,72 will indicate the start of wave 5 or another wave inside the “Hound of the Baskervilles” pattern by Elder/MF. If this is the case, the following levels will act as resistance levels: 102.89, 103.05/09, 103.26. Alternatively, the current bullish wave will be completed if the price breaks and consolidates below the bottom of the MF sloping channel and pivot 101.86.
