It is not the trade balance data that will guide the yen movements today but the sentiment around the British referendum. It is still woth checking what is the state of the Japanese economy as the Brexit story will end some day and the policymakers will be left with the old problems. And the data show that problems are definitely not gone. Export is down again in nominal terms, 8th time in a row. In May it was -11.3% YoY, more than the 10% the market expected. Export to China alone was down 15% YoY, and export of steel by a whole 24%. Another business climate indicator - the imports of semi-conductors was seen falling 20%. Total import declined by 13.8% (as expected, and following -23.3% from April).
As a consequence there was a 40.7b JPY deficit instead of the expected 70b JPY surplus after 823b JPY surplus previously.Not everything looks bad in the release. Real export is actually up 4% YoY, but faces a recent massive JPY appreciation, stimulated by growing Brexit concerns and global risk-off in June.
Since the end of May JPY gained 5.76% vs. USD. Year-to-Date the appreciation is c. 15%
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