Regardless of the current trade tension situation, the Japanese economy manages to maintain steady exports growth for four consecutive months. Estimated at 8.10% y/y in May, Japan exports moderate growth does not show clear signs of trade tensions so far, with Food (+25.70%), Raw Materials (+13.50%), Minerals (+33.60%) and Chemicals (+12.50%) being the largest contributors.
In spite of intensifying retaliatory threat measures between its key partners, Japan’s exports towards China and the US rose by +8.60% and +16.80% respectively, a rather good news for Prime Minister Shinzo Abe who’s been striving for tighter relationships with both nations.
Due to increasing domestic demand in the country, we would consider to treat May adjusted trade balance data with sensitivity. Indeed, given at JPY -296.8 billion (USD -2.73 billion), a major decrease after JPY +453.94 billion (USD +4.16 billion) in prior month, May trade balance is essentially explained by recent unusual import numbers, strongly boosted by oil, aircraft and pharmaceutical product imports.
Accordingly, recent trade data are suggesting a rather decent growth trend for the world largest economies, supported by strong domestic consumption. On Japanese side, we expect a rapid bilateral trade resolution with the US and continued healthy trade relation with China.
Currently trading at 110.54, the USD/JPY is gaining strength, approaching the 110.80 range and expected to progress further since recent bounce from 109.92 (14/06/2018 low).
By Vincent Mivelaz
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