The yen declined against the greenback yesterday following the release of an unexpectedly lower-than-anticipated increase in final wholesale inventories in September. The eight-year low Japanese current account surplus for the first half of 2022 also kept the yen under selling pressure. Overall, the USD/JPY pair rallied from a low of 145.17 to a high of 146.80 in the past 24 hours.
According to the data published by Japan’s Ministry of Finance, the country’s current account surplus fell to ¥909.30 billion in September 2022 from ¥1.653 trillion in September 2021. The reported figure surpassed forecasts of a surplus of ¥234.50 billion.
The primary income surplus grew to ¥3.222 trillion in September 2022, from ¥2.337 trillion in September 2021. The secondary income deficit narrowed slightly to ¥210.40 billion, from ¥231.80 billion. In the meanwhile, the goods account deficit surged to ¥1.759 trillion, from ¥239 billion, with exports rising by 27.50% on a y-o-y basis. Imports surged by 47.90%, primarily due to a steep increase in commodity prices and the weakening of the yen. Additionally, the service account deficit widened to ¥343.10 billion from ¥213.40 billion.
In the first half of this year, the country’s current account surplus plunged by more than 50% to reach an eight-year low of ¥4.85 trillion ($33 billion). Japan’s trade deficit was ¥9.23 trillion, with imports increasing at twice the rate of exports. While imports surged 47.10% to ¥58.76 trillion, exports jumped 21.30% to ¥49.52 trillion. The travel surplus contracted to ¥59.20 billion in September 2022 from ¥104.80 billion in September 2021. The services trade deficit was ¥3.22 trillion.
According to the data published by the Bank of Japan, the country’s bank lending rose by 2.70% y-o-y in October to ¥593.08 trillion, following a growth of 2.30% in September.
Excluding trusts, lending grew by 3% y-o-y in October to ¥516.328 trillion. Lending from trusts increased by 0.60% to ¥76.755 trillion. Lending from overseas banks jumped 12.30% y-o-y in October, picking up pace from 2.70% in September.
According to the US Census Bureau, the country’s final wholesale inventories grew by 0.60% in September to $918.50 billion, following an increase of 1.40% in August. The initial estimates had pegged a 0.80% rise in initial inventories. Economists did not anticipate any change in the initial wholesale inventory data. In the case of wholesale inventories, the lower the better.
Total inventories surged by 24.10% y-o-y in September.
The September inventories/sales ratio for merchant wholesalers stood at 1.31 in September 2022, up from 1.21 in September 2021.
Furthermore, merchant wholesalers recorded sales of $699.90 billion in September, an increase of 0.40% on an m-o-m basis. On a y-o-y basis, merchant wholesalers recorded a sales increase of 14.40% in September 2022.
The upbeat wholesale inventory data is expected to keep the US dollar slightly bullish against the pound in the days ahead.
Technically, the USD/JPY pair is rising after testing the support at 146.10. The next resistance is anticipated only near 147.60. Additionally, the currency pair is trading above its 50-day moving average, while the MACD indicator is showing a positive reading. Therefore, we anticipate the currency pair to remain in an uptrend in the days ahead.
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.
