Swissquote Bank Research Team
Swissquote Bank Ltd
Opening the door for further trade relationships, the EU – Japan trade deal signed on Tuesday is providing a great message against protectionism. Taking into effect in 2019 and with the purpose of eliminating 99% of total tariffs between both blocs, a sum estimated along EUR 1 billion, the EU just signed its largest trade deal, expected to increase EU exports into Japan by over one third (currently estimated at EUR 86 billion). Japan is the second biggest partner in Asia after China and sixth trading partner worldwide.
Japanese nominal June inflation y/y data published at +0.70%, in line with prior month along with a slight increase in core gauge (ex fresh food) at +0.80% (prior: 0.70%) due to higher oil prices suggest that inflation target of 2% remains far, though recent bounce in June trade balance of JPY 721.4 billion (USD 6.5 billion), confirms heathy growth fundamentals. Common inflation drivers such as wage growth, unemployment rate at historical low and weaker JPY confirm the tendency of an acceleration in inflation for the coming periods, along 1% in 3Q. Accordingly, we expect the BoJ to maintain its dovish stance during 31. July 2018 monetary policy meeting.
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Trading at 112.46, the USD/JPY is currently trading neutral. The tendency should however favor a slight increase of the pair along 112.60.
This report has been prepared by Swissquote Bank Ltd and is solely been published for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any currency or any other financial instrument. Views expressed in this report may be subject to change without prior notice and may differ or be contrary to opinions expressed by Swissquote Bank Ltd personnel at any given time. Swissquote Bank Ltd is under no obligation to update or keep current the information herein, the report should not be regarded by recipients as a substitute for the exercise of their own judgment.
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