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Japanese Yen Stable, Gains on US Dollar

September 16, 2020 at 11:13 by Vladimir Vyun

1,000 and 10,000 Japanese yen notesThe Japanese yen was stable against other most-traded currencies today, even managing to gain on the US dollar, despite the generally positive market sentiment. Traders were more cautious than usual, though, due to the upcoming FOMC monetary policy announcement, resulting in quieter-than-usual trade.

Yoshihide Suga, who was serving as Chief Cabinet Secretary, will replace Shinzo Abe as Japan’s prime minister. Abe had step down due to his problems with health. Suga promised to continue the policy of his predecessor, known as Abenomics. But experts said that he will likely try to reduce public spending, meaning that any additional stimulus packages aimed to support households and businesses struggling after the coronavirus pandemic will be limited.

Japan’s Ministry of Finance reported that the country’s trade balance surplus increased from ¥0.04 trillion in July to ¥0.35 trillion in August on a seasonally adjusted basis. That surprised economists who were expecting a decrease to ¥0.01 trillion. Month-on-month, exports rose by 5.9%, while imports increased by just 0.1%, seasonally adjusted. Not everything was positive, though. Year-on-year, exports dropped by 14.8%, without adjustments for seasonal variations. While the drop was not as big as analysts had predicted (16.1%), it was the 8th consecutive double-digit decline and the 21st straight monthly contraction. It is the worst stretch of falls since the 23-month decline in 1987.

The Bank of Japan will make its monetary policy announcement tomorrow. While specialists do not expect any changes to the existing policy, the tone of the statement can be important. Experts speculate that it will be more optimistic as the global economic recovery is underway.

USD/JPY dropped from 105.44 to 105.03 as of 11:13 GMT today. EUR/JPY fell from 125.01 to 124.66. GBP/JPY was up from 135.88 to 136.21, bouncing from the session minimum of 135.55.

If you have any questions, comments, or opinions regarding the Japanese Yen, feel free to post them using the commentary form below.

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