Japanese trade deficit turns JPY bearish
- Last Updated on 09 February 2012
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Investors largely abandoned the JPY in trading yesterday, following news that Japan has logged a trade deficit for the first time in over 30 years. Increased demand for Japanese exports played a large part in the yen selloff. Questions regarding how long the country will be able to maintain its large public debt caused the currency to tumble. While the USD/JPY climbed above the 78.00 level, the EUR/JPY approached 102.00 during European trading before staging a slight reversal.
Today, the yen is not forecasted to stage a meaningful recovery. While Japan's status as a creditor country is not in danger at the moment, significant policy changes will have to be implemented to address the current situation. In the meantime, a bearish yen appears to be on the horizon.