USD/JPY advanced after Japanese trade balance data

US dollar advanced against the Japanese yen on Monday, following the release of weaker than projected trade balance report out of Japan, as the lack of clarity over the future of Federal Reserve Bank’s stimulus program persisted.

USD/JPY reached its highest point at 97.84 at 0:10 GMT, the pairs highest since August 15th, after which consolidation followed at 97.66. Support for the pair was expected at August 16th low, 97.04, while resistance was to be encountered at August 13th high, 98.33.

An official report said today that Japanese export rose to its highest level since July 2010, supporting the efforts by Prime Minister Abe to spur economic recovery, while at the same time larger energy costs widened Japans trade deficit. Export figure rose by 12.2% in July 2013 compared to July 2012, after the 7.4% rise in June. Import, however, increased by 19.6% in July, causing the trade balance deficit of the country to widen to 1.024 trillion JPY, which was the third largest deficit ever recorded. Experts had anticipated an increase in the deficit figure by a smaller rate to 0.773 trillion JPY. Seasonally adjusted trade balance also registered a larger deficit in July at the amount of 0.944 trillion JPY, while expectations pointed a deficit of 0.741 trillion JPY. This data implied that Japanese economy was supported by the initiated recovery in Europe and the United States alongside the 11% depreciation of the Japanese yen against the US dollar during this year. Economic recovery is a key factor in order Bank of Japan to increase the tax on sales to 8% in April next year from the current 5% level. Such a measure will put additional pressure on consumer spending.

Meanwhile, market participants awaited the release of the minutes of Federal Reserve Bank’s July meeting, scheduled on Wednesday, as it may provide clues on when the central bank may begin tapering its stimulus program. Policymakers will probably begin to pare back the central bank’s bond-buying program in September, according to 65% of experts in a survey by Bloomberg. Such expectations were boosted after on August 15th a report said that the weekly initial jobless claims in the United States decreased in number to their lowest in almost six years.

Elsewhere, the Japanese currency was losing ground against the euro, as EUR/JPY cross added 0.10% for the day to trade at 130.20 at 9:26 GMT. GBP/JPY pair was also gaining, up by 0.26% to trade at 152.85 at 9:28 GMT.