Positive Trade Figure Boosts Yen

February 8, 2011 - Written by John Cameron

STORY LINK Positive Trade Figure Boosts Yen

The Yen continues to trade in a classic medium-term up trend against Sterling, strengthening from above 160 in 2009 to break down through 130 at the end of January. Since mid-2007, the Yen has made even more strident gains against the USD, strengthening from 124 to a near-term high of 82.

Although there has been some profit-taking since the Yen reached its near-term highs, many analysts predict that the sideways trading pattern that it has been locked into in the past two weeks is set to be broken with a further move forward as risk appetite increases. Further positive global economic numbers are likely help to drive this increase.

Jim Lentz, President of Toyota Motor Sales in the US, reminded analysts over the weekend that a strong Yen was not good news for Japanese exporters. He commented that executives at the world’s largest car manufacturer were ‘concerned’ about the Yen’s strong move forward over the past three years. He went on to comment that "A yen that is sub-85, (against the US Dollar), is a very tough situation.” However, Lentz went on to comment that he expected the Yen to weaken off in coming months.

However, figures released overnight showed that Japan’s current account surplus widened by more than had been anticipated in January, (to ¥1195.3Bn, up from a figure of ¥926.2Bn in November). This figure shows that in spite of the strength of the Yen, Japan’s export markets continue to maintain significant levels of demand for Japanese products.
Japanese Leading indicator numbers for December, (released in the early hours on Monday), came in exactly in line with expectations.

The Yen’s momentum looks unlikely to lose steam any time soon – even the Japanese central bank’s attempts at intervention to weaken the Yen look to have failed.

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TAGS: Pound Yen Forecasts Japanese Yen Forecasts