The Japanese Current Account measures the difference in value of imported and exported goods and services each month. A reading which is higher than the forecast is bullish for the yen.
Here are all the details, and 5 possible outcomes for USD/JPY.
Published on Thursday at 23:50 GMT.
Indicator Background
Japanese Current Account provides a snapshot of the health of the economy, and is directly linked to currency demand, since a surplus points to stronger demand by foreigners for yen, in order to purchase Japanese goods and services.
Although Current Account has posted a string of modest surpluses, the past two releases have fallen below market estimates. The previous release came in at 0.10 trillion yen, and the estimate for this month is almost the same, at 0.11 trillion. Will the indicator meet or beat this month’s forecast?
Sentiments and levels
While the political deadlock in Italy could weigh on USD/JPY, Japan continues pushing forward with monetary and fiscal stimulus measures. The nomination of Kuroda at the BOJ will likely be approved, and he is expected to tow the government’s line in fighting deflation and increasing easing. Assuming that the US figures continue to improve, as we have seen with recent key data, another attempt to break past 95 could be seen now, and perhaps it will be successful this time. So, the overall sentiment is bullish on USD/JPY towards this release.
Technical levels, from top to bottom: 96.90, 94.70, 94.40, 93.84, 92.95 and 92.12.
5 Scenarios
- Within expectations: -0.2T to 0.4T: In such a case, the yen is likely to rise within range, with a small chance of breaking higher.
- Above expectations: 0.5T to 0.8T: An unexpected higher reading can send USD/JPY above one resistance level.
- Well above expectations: Above 0.9T: The chances of such a scenario are very low. The pair could break two or more resistance lines on such an outcome.
- Below expectations: -0.6T to -0.3T: A weak reading could push USD/JPY downwards, and one support level could be broken as a result.
- Well below expectations: Below -0.6T: A large deficit would likely hurt the yen, and the pair could break two or more support levels.
For more on the yen, see the USD/JPY