A report to be released on May 23 is expected to show that Japan had a trade deficit for the second month. Euro’s advance against the Japanese currency was limited as concerns about the consumer confidence report which is expected to show a drop to a four-month low. The debt crisis in the 17-nation trading bloc is worsening hence making it hard for the euro to recover.
According to Takuya Kawabata who is a researcher at Gaitame.com Research Institute Ltd., said that if the yen continues with its current bullish trend, the BOJ might be forced to add stimulus curb this. The yen has started the week on a decline as investors await for the report from BOJ indicating whether it is going to increase stimulus. The report will be released after a two day meeting of BOJ officials. However, analysts expect the trade data to provide a bearish stance for the yen.
The trade deficit report is expected to show that Japan registered a trade shortfall of about 470 billion yen in April after it registered 84.5 billion yen in March. This will also cause the yen to lose some grounds against major currencies especially the US dollar.
The yen dropped by 0.3 percent against the dollar to trade at 79.23 in London after it had climbed 1.2 percent against the US currency last week. The Japanese currency further declined against the 17-nation currency by 0.3 percent to trade at 101.32 yen.