The euro remained range-bound against the yen on the first trading session of the week following the release of worse-than-anticipated Eurozone Sentix investor confidence index data for July. Japan’s economic data was mixed. This enabled the euro to hold its ground against the yen. Overall, the EUR/JPY pair traded in a range of 173.48 to 174.63 in the past 24 hours.
According to Japan’s Ministry of Health, Labor, and Welfare, the country’s average cash earnings grew by 1.90% y-o-y in May, following a 1.60% increase in the previous month, but missing forecasts of a 2.10% gain. The reported figure reflects the highest reading since January.
The construction sector led the increase, which recorded a gain of 7.20% y-o-y in May. Likewise, transport and postal activities posted an increase of 5.70%. Information and communication reported a rise of 4.80%.
On the contrary, compound services posted a decline of 6.30% y-o-y in May. While mining and quarrying of stone and gravel reported a decrease of 3.70%, finance and insurance inched down 0.90%.
Japan’s nominal wage growth in May was outpaced by the 2.5% core consumer inflation rate, resulting in the 26th consecutive month of negative inflation-adjusted real wages, which declined by 1.4%.
The value of loans held by Japan’s banks rose by 3.20% y-o-y in June, following a 2.90% increase in the previous month, surpassing forecasts of 3.10%. Specifically, the outstanding loans held by Japan’s top, domestic, and “shinkin” banks were ¥622.70 trillion. The major banks contributed to loan growth of 4.40%, while regional banks recorded an increase of 3%. “Shinkin” banks posted loan growth of 0.50%.
According to the data published by Japan’s Ministry of Finance, the country’s current account surplus increased to ¥2.85 trillion in May 2024 from ¥2.01 trillion in May 2023, surpassing forecasts of ¥2.45 trillion. The reported figure reflects the 16th successive monthly surplus in the current account.
The increase was led by primary income, which widened to ¥4.21 trillion in May 2024 from ¥3.73 trillion in the comparable period last year. The services recorded a small surplus after recording a deficit of ¥180.30 billion last year.
The secondary income deficit narrowed to ¥254.40 billion from ¥336.50 billion. Also, the goods account surplus narrowed to ¥1.11 billion in May 2024, from ¥1.200 in the previous year. Notably, exports surged by 12.10%, while imports grew by 9.30%.
In a separate news release, Japan’s Cabinet Office stated that the country’s economy watchers sentiment index rose to 47 points in June from 45.70 in May, surpassing forecasts of 46.10.
According to Destatis, the German trade surplus increased to €24.90 billion in May from €22.20 billion in April, surpassing forecasts of €19.90 billion.
Germany exported goods worth €131.60 billion in May, a decrease of 3.60% from April. On a y-o-y basis, German exports fell by 1.60% in May 2024. The country imported goods worth €106.70 billion in May, down 6.60% from April. On a y-o-y basis, German imports decreased by 8.70% in May 2024.
The Eurozone Sentix investor confidence index unexpectedly plunged to -7.30 in July from 0.30 in June. The reported reading was worse than forecasts of a 0.60% decline.
The current situation index worsened to -15.80 in July from -9 in June. Likewise, the expectations index declined to 1.50 from 10.
In the US, the Sentix investor confidence index declined for the third month to 10.70 in July, reflecting the lowest level since January 2024, from 14.90 in June. The current situation index fell to 24.80 in July from 28.30 in June. More importantly, the expectations index dipped to -2.50 from 2.30. The current situation and expectations index has hit the lowest level since January 2024.
In Asia (excluding Japan), the Sentix investor confidence index fell to 13.10 in July from 18.10 in June. The current situation index declined to 12.50 from 16.50. Similarly, the expectations index declined to 13.80 in July, reflecting the lowest level since February, from 19.50 in June.
The unexpectedly weak Eurozone Sentix investor confidence index is expected to keep the EUR/JPY pair slightly bearish in the short term.
The historical price chart indicates that the EUR/JPY pair is ascending after consolidating near the support level of 173.55. The stochastic indicator is in the bullish zone. Therefore, we anticipate the EUR/JPY pair to gain further ground in the next few trading sessions.
Disclaimer: Any financial trading analysis offered here is our opinion and is not intended as advice or direction for investors. We cannot guarantee the success of any trades made as a consequence of this article, and we encourage traders to incorporate a strong money management strategy to limit losses when they enter the markets. Please use this article as part of your own research before formulating strategies prior to trading.
