The Euro rallied against the yen on Friday after the release of weak Japanese industrial production data for May. The Eurozone economic data was not impressive but better than anticipated by economists. This enabled the EUR/JPY pair to rally from a low of 154.49 to a high of 156.13 in the past 24 hours.
According to Japan’s Ministry of Economy, Trade, and Industry (or METI), the country’s industrial production fell by 2.20% m-o-m in May following a 0.70% increase in the previous month. The preliminary estimates pegged the contraction at 1.60%. Economists did not anticipate any change in the preliminary estimates.
The reported figure reflects the first decline in industrial output since January, primarily pushed down by an 8.90% decrease in the output of motor vehicles. Electrical machinery and information and communications electronics equipment fell by 4.40%. Inorganic and organic chemicals posted a decrease of 4.60%.
On a y-o-y basis, industrial output rose by 4.20% m-o-m in May 2023, reflecting a rebound from a 0.70% decline last year. The annual reading represents the first growth in seven months and the steepest increase since September 2022.
The Italian National Institute of Statistics has stated that the country’s trade surplus surged to €4.71 billion in May from €318 million in April and blew away forecasts of €1.45 billion.
In the corresponding period last year, Italy recorded a trade deficit of €62 million. Imports plunged 7.60% y-o-y in May 2023 to €52.30 billion. The decrease was led by a 41.20% drop in energy imports. In the meantime, exports inched up 0.90% in May 2023 to €57.1 billion. The increase was led by a 13% and 6% rise in capital and consumer goods exports, respectively.
According to Destatis, Germany’s wholesale price index declined 0.20% m-o-m in June, following a 1.10% decline in the previous month and slightly better than forecasts of a 0.50% decrease.
On a y-o-y basis, German wholesale selling prices fell by 2.90% in June 2023, missing forecasts of a 1.20% decrease. This represents the steepest annual decline in prices since June 2020. In May 2023, wholesale selling prices decreased by 2.60%.
The decline was led by a 22.70% y-o-y drop in wholesale selling prices of petroleum products in June. Likewise, scrap and residual materials posted a decrease of 31.70%. While cereals, raw tobacco, seeds, and feedstuffs fell by 28.40%, ores, metals, and semi-finished metal products declined by 20.80%.
On the contrary, prices of fruit, vegetables, and potatoes surged by 29.50% y-o-y in June. Additionally, living animals recorded a jump of 20.70%. Similarly, building materials and elements posted a growth of 7.70%.
The weak economic data from Japan is expected to keep the yen slightly bearish in the short term.
The historical price chart indicates that the EUR/JPY pair is ascending after testing support at 153.65. The next resistance is anticipated only near 157.95. Additionally, the currency pair is trading above its 50-day moving average, while the stochastic indicator is in the bullish zone. Therefore, we anticipate the EUR/JPY pair to remain in an uptrend for 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.
