8 Dec 2014
Wider than expected current account surplus offers some support for JPY - BTMU
FXStreet (Barcelona) - Lee Hardman, FX Analyst at the Bank of Tokyo Mitsubishi UFJ, notes that Yen derived some support overnight from the release of a wider than expected current account surplus, but the Yen weakening trend still remains firm.
Key Quotes
"The yen weakening trend remains firmly in place with USD/JPY continuing to rise closer towards the pre-global financial crisis high of 124.14 from June 2007. Yen weakness has extended recently after the BoJ accelerated already aggressive monetary easing in response to downside risks to inflation."
"Still, the poor performance of the economy does not appear to be eroding public support for the government ahead of the upcoming election on the 14th December. A survey published by the Mainichi newspaper today has even suggested that the LDP could achieve a “super majority” on its own taking as many as 320 out of the 475 seats."
"Deputy Chief Cabinet Secretary Seko has stated that “if we receive a mandate in this election, Prime Minister Abe will gain a great deal of power to move forward with reforms”….and “where progress has been slow, it will mean a leap forward”. The comments will likely reinforce investor confidence that a favourable election result will provide a boost to the potential success of Abenomics policies."
"The yen has derived some support overnight from the release of the latest current account report from Japan which revealed a wider than expected surplus in October. On a seasonally adjusted basis, Japan’s current account surplus widened sharply by JPY535.6 billion to JPY947 billion in October reaching its widest level since September 2011."
"The widening in Japan’s current account surplus was driven by: i) the trade in services balance moved into surplus improving by JPY287.6 billion, and ii) the primary income surplus widened by JPY290.3 billion. The recent improvement in Japan’s current account surplus if it continues will add to our view that the yen appears increasingly undervalued according to long-term valuation measures."
Key Quotes
"The yen weakening trend remains firmly in place with USD/JPY continuing to rise closer towards the pre-global financial crisis high of 124.14 from June 2007. Yen weakness has extended recently after the BoJ accelerated already aggressive monetary easing in response to downside risks to inflation."
"Still, the poor performance of the economy does not appear to be eroding public support for the government ahead of the upcoming election on the 14th December. A survey published by the Mainichi newspaper today has even suggested that the LDP could achieve a “super majority” on its own taking as many as 320 out of the 475 seats."
"Deputy Chief Cabinet Secretary Seko has stated that “if we receive a mandate in this election, Prime Minister Abe will gain a great deal of power to move forward with reforms”….and “where progress has been slow, it will mean a leap forward”. The comments will likely reinforce investor confidence that a favourable election result will provide a boost to the potential success of Abenomics policies."
"The yen has derived some support overnight from the release of the latest current account report from Japan which revealed a wider than expected surplus in October. On a seasonally adjusted basis, Japan’s current account surplus widened sharply by JPY535.6 billion to JPY947 billion in October reaching its widest level since September 2011."
"The widening in Japan’s current account surplus was driven by: i) the trade in services balance moved into surplus improving by JPY287.6 billion, and ii) the primary income surplus widened by JPY290.3 billion. The recent improvement in Japan’s current account surplus if it continues will add to our view that the yen appears increasingly undervalued according to long-term valuation measures."