What Lies Ahead of BOJ

Overnight, some economic data were released from Japan which unfortunately came out disappointing. For example, adjusted trade balance figures came at -0.36T while market was expecting -0.7T, Export (YoY) was 0.6% below market forecast of 3.4%, imports (YoY) figure came at -11.1% which is stronger than expected, Trade balance was also negative at -114B while 84B was expected and industrial activity index (MoM) also dropped to  -0.2%.

These economic data indicates that economic activity in Japan is slowing down most importantly trade activities which decline sharply in Q3. Export has dropped significantly likewise industrial activities and trade balance. This is very bad for the Japanese economy especially as it points to lower growth. Market awaits the next Bank of Japan meeting which comes up the end of the month, looking at these poor economic data and growth in japan; there are possibilities of more intervention by BOJ in terms of Quantitative easing in other to stimulate economic activities.

However, the decline in economic activities in Japan might be attributed to the spill over effect from Chinese economic uncertainty which has affected global economic growth especially trading activities with emerging markets. This might actually be a reason BOJ will consider and leave policy unchanged regarding more stimulus.

The Japanese Yen (jpy) has dropped significantly on the back of these weaker than expected trade data released. USDJPY now trades above 120.00.