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A surge in exports and weaker than expected imports caused a surprise surplus in Japanese trade, on an adjusted basis. The headline figure of -943 billion yen was smaller than expected as rising exports offset weak consumption. On an adjusted basis the balance came in at a surplus of 0.37 trillion yen, more than double the expected 0.14%.

The gains were driven by exports which jumped 12.2%. The jump shows increased global demand for Japanese goods and supports the idea that a rising market lifts all ships; if the rest of the world is improving then Japan will surely benefit, and they are. The news did not spark a rally in the yen but it did help it to hold its ground versus the basket of world currencies. With holiday’s in the US, Canada, China and Hong Kong action in many markets was muted.

The yen gained versus the pound, but the gains were capped by the short term moving average. UK housing prices came in a little hotter than expected at 0.8% in evidence of tighter markets and helped to firm the pound. The GBP/JPY has been trending up over the past few weeks but may have reached a top. Early Monday action extends a drop from resistance that is supported by the indicators. Both MACD momentum and stochastic are bearish and pointing lower suggesting lower prices are coming. A break below the moving average would be bearish and could take the pair down to 140 or 130. Later in the week UK GDP figures could move the pair.

GBP/JPY has been trending up

The yen gained versus the euro, but the gains were minimal ahead of important PMI and CPI data from the EU. Although the gains were small, it did push the EUR/JPY lower in an apparently bearish maneuver. The caveat of course is quiet markets with low volume are often not trustworthy. The indicators are bearish and pointing lower, in support of lower prices, and suggest a break of support is possible. A move below 132 would provide more confirmation, lower targets are 128, 124, and 120.

 EUR/JPY lower in an apparently bearish maneuver

The yen fell against the dollar although exchanges in the US were closed. The USD/JPY moved up by nearly 0.40% on the Japanese trade data and extended a bounced from the 106 level. The 106 level is a target for long term and strong support, a break of which would be bearish.

USD/JPY moved up by nearly 0.40%

Today’s action suggests that there is still support for the pair at this level, but caution is due. US PMI and housing data is due out this week that could help firm the dollar. A move up may find resistance at 108. The risk with this, and with all of these pairs now, is that improving global economies may support the yen by default; as global economies improve so will Japan’s and that will lead the BOJ to tighten.

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NOTE: This article is not an investment advice. Any references to historical price movements or levels is informational and based on external analysis and we do not warranty that any such movements or levels are likely to reoccur in the future.
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