Japanese Merchandise Trade Balance Falls Into Deficit, Fueling Recessionary Concerns

[DailyFx]

Fundamental Headlines

• Crisis Stirs Critics of Free Markets – Wall Street Journal
• Lawmakers to Let Offshore-Drilling Ban Expire – Wall Street Journal
• Regulators’ moves insure more nerves for dealers in CDS – Financial Times
• Money-Market Rates Rise on Concern Congress Will Delay Plan – Bloomberg
• Shell, BP to Shut Refineries for Repair, Cut Europe Fuel Supply – Bloomberg

• EURUSD – The German GfK consumer confidence index unexpectedly improved to 1.8 from 1.5 in September on the back of falling oil prices. Indeed, the improved sentiment should help to brighten the growth outlook for Europe’s largest economy, but a breakdown of the report showed that all of the components continued to hold in negative territory, which suggests that the economy is far from recovery. Amid mounting growth concerns for Germany, the ECB persists to hold a hawkish outlook on inflation, which suggests that the central bank will hold the benchmark interest rate steady at 4.25% for the rest of the year. Meanwhile, the M3 money supply growth cooled in August, falling to 8.8% from 9.3%. Discuss the topic and your trade ideas in the EUR/USD Forum.

• USDJPY – Mounting growth concerns for the world’s second largest economy continues to raise the argument that Japan has fallen into a recession as the merchandise trade balance fell into deficit for the first time since January. The trade balance slipped to -324.0B from 91.1B in July as exports to the U.S. fell at a record pace. Fading demands suggests that economic activity for the export oriented country may remain subdued for the rest of the year, and conditions may only get worse as rampant inflation continues to sap purchasing power for Japanese consumers. Furthermore, the corporate service price index inched higher in August, rising to 1.4% from 1.3%, signaling that inflation will be an ongoing concern for the BoJ as growth prospects dissipate. For more news and resources, visit the new Japanese Yen Currency Room.





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