Japanese Current Account Reports Deficit For First Time In 13 Years

Japanese Current Account Actual 0.26T, Expected 0.40T, Previous 0.56T

Release Explanation: The Japanese Current Account Balance summarizes the flow of goods, services, income, and transfers into and out of Japan. This report is more expansive since it also includes transfer payments and income flows such as foreign aid and returns on investments in foreign assets. The most significant component of the current account is the trade balance figure. A currency will be impacted by this report mainly as a knee-jerk reaction of institutions re-aligning existing positions. The longer term trend will normally take time to reverse and therefore take time to impact currency valuations.

Trade Desk Thoughts: Japan had its first deficit in the last 13 years (in the current account in January) due to the global recession killing demand for exports. The global slump has eroded earnings, which has prompted companies to lay off workers and slow down production. Shipments to the United States, which is Japan’s largest trading partner, plummeted 52.9 percent in January when compared to one year earlier.

Forex Technical Reaction: The Japanese yen found resistance just after the new trading day started as the pair ran into the high of the previous day at 98.45.

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