The research team at BBH explains that the Japan's trade March trade surplus of JPY614.7 bln was larger than the Dow Jones survey of economists projected (JPY576 bln), but still off more than 17% from a year ago.
“Merchandise exports rose 12% year-over-year, nearly twice the median guesstimate. Exports to Asia were strong (16.3% year-over-year), reaching a record high and helped by Chinese demand for autos and auto parts. Imports rose 15.8%, well above February's 1.2% gain and half again as much as the 10% anticipated. The value of Japanese exports rose to the highest level since September 2009.”
“Japan's trade figures are under closer political scrutiny given the stance of the Trump Administration. Exports to the US rose 3.5%, the second consecutive increase, though auto exports were off 7.2% (in volume terms). Imports from the US rose 16.3% (in value terms). The US bilateral deficit with Japan narrowed 8.1% from a year ago.”
“Separately, we note that the MOF weekly figures show Japanese investors continue to repatriate funds. Between foreign stock and bond sales, Japanese investors sold a JPY1 trillion of foreign assets last week. For their part, foreign investors bought about JPY726 bln yen of Japanese paper assets, about a 25% decline from the previous week. Evidence that yen strength reflects safe haven demand still seems elusive.”
“There are some sizeable yen options set to expire today. There are options worth $1.9 bln struck at JPY109 that roll off today, and another $315 mln at JPY108.95. Tomorrow, there is a JPY109 strike that will see another $1.9 bln roll off. It looks like resistance near JPY109.20 will be sufficient to check dollar gains now. Support is pegged in the JPY108.40-JPY108.70.”