USD/JPY is slightly bullish on Monday, but the pair is moving sideways on larger timeframes. Currently, one US dollar buys 107.73 Japanese yen, up 0.23% as of 8:25 AM UTC. The pair started the month at relatively the same level. So far, the price has fluctuated in April between 106.99 and 109.38.
Last week, the price formed a double top, which is a bearish pattern in technical analysis. After failing to break above 108.08 on two occasions, the pair has retreated a bit, but it might make another attempt this week.
The yen has weakened as Japanese exports tumbled by the most in about four years last month, as the COVID pandemic has affected the global trade.
Japan’s Trade Data Reflects Weakening Economic Activity
Earlier Monday, Japan’s Ministry of Finance said that exports declined 11.7% in March, while analysts anticipated a 10.1% decrease. In February, the indicator was down only 1%.
Norinchukin Research Institute’s chief economist Takeshi Minami commented:
“The impact is likely to continue in April and onwards, which will prevent economic activity from normalizing. That will keep trade volume constricted globally.”
Exports to China, Japan’s largest trading partner, declined by 8.7%, dragged down by exports of car parts, organic compounds and chip-making machinery.
Shipments to the US fell 16.5% last month, which is the biggest drop since April 2011. The decline was driven by lower demand for automobiles, airplane motors, and construction machinery.
Exports to Asia, which account for over 50% of Japan’s exports, fell 9.4%. Elsewhere, exports to the European Union declined by 11.1%.
Imports declined by 5.0% year-on-year in March, which is better than economists’ expectations of an almost 10% decline. Thus, Japan’s trade balance last month displayed a surplus of 4.9 billion yen, which is the equivalent of $45.5 million.
The imports/exports data stresses Japan’s economic problems amid the COVID pandemic. The government led by Prime Minister Shinzo Abe is expecting the worst decline in economic activity since the Great Depression about a century ago.
Japan is in a much better position than the US in terms of coronavirus infections and deaths. However, after a spike in new cases, Abe expanded the state of emergency to include the whole country. So far, Japan has reported more than 10,700 cases and 236 deaths caused by the new coronavirus.
