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9 Nov 2015
JPY: Current account data to point towards surge in surplus - MUFG
FXStreet (Delhi) - Derek Halpenny, European Head of GMR at MUFG, suggests that the Japan’s September estimate is expected to be more than double the surplus in September 2014 ensuring that the story of a rapidly expanding surplus continues.
Key Quotes
“Stronger than expected cash earnings data today will reassure the BOJ that inflation will gradually move higher in Japan. But the gains remain relatively muted and there were downward revisions to the previous month while the summer bonus total fell (albeit due to a quirk in the collection of the data) so it would appear premature to assume this points to upward pressure on domestic inflationary pressures.”
“The key data this week may well be the current account data tonight. We are very sceptical of the view that the yen is set to weaken notably further as the FOMC begins to raise its key rate. The current account is expanding rapidly and that is set to act as a key support for the yen at these weaker levels. The yen has undergone two massive devaluations fuelled by huge QE program announcements by the BOJ.”
“A small number of rate increases by the Fed is unlikely to reinvigorate this higher USD/JPY trade. The current account surplus in the year to August totalled JPY 11,643bn compared to just JPY 155bn in the same period of last year.”
“If USD/JPY does manage to eke out modest gains going forward the yen on a trade-weighted basis is certainly set for further gains as the dollar performs better versus other currencies.”
Key Quotes
“Stronger than expected cash earnings data today will reassure the BOJ that inflation will gradually move higher in Japan. But the gains remain relatively muted and there were downward revisions to the previous month while the summer bonus total fell (albeit due to a quirk in the collection of the data) so it would appear premature to assume this points to upward pressure on domestic inflationary pressures.”
“The key data this week may well be the current account data tonight. We are very sceptical of the view that the yen is set to weaken notably further as the FOMC begins to raise its key rate. The current account is expanding rapidly and that is set to act as a key support for the yen at these weaker levels. The yen has undergone two massive devaluations fuelled by huge QE program announcements by the BOJ.”
“A small number of rate increases by the Fed is unlikely to reinvigorate this higher USD/JPY trade. The current account surplus in the year to August totalled JPY 11,643bn compared to just JPY 155bn in the same period of last year.”
“If USD/JPY does manage to eke out modest gains going forward the yen on a trade-weighted basis is certainly set for further gains as the dollar performs better versus other currencies.”