Despite Mixed Data, Japan’s Recovery Seen on Track

(eToro Blog) In Japan, it was reported late yesterday that overall household spending as seasonally adjusted fell in April on a year-over-year basis to 2.6% from 3.4%, but the data was better than forecasters’ calls for a drop to 2.4%. At the same time, the Ministry of Economy, Trade and Industry reported that retail sales rose in April by 5.8% on a year-over-year basis, just off the consensus forecast of a rise to 6.3%. Sales at large retailers was slightly worse than forecast in April falling to negative -0.5% from 5.1%, against expectations of a decline to -0.3%.

Separately, the Internal Affairs Ministry reported that unemployment unexpectedly rose in April to 4.6% from 4.5% on a seasonally adjusted basis; analysts polled had expected the rate to remain unchanged. Analysts from BNP Paribas note that the labor situation remains dire in Japan, but that there are some signs of steady albeit slow improvement; given that their analysts expect that the unemployment rate could fall below 4% sometime next year.

Over the past weekend, the Bank of Japan released the minutes of its April 27^th meeting, at which time the central bank announced an increase of ¥10 trillion to its asset purchase program. The central bank’s policymakers said that they remain committed to achieving a 1% inflation rate, but also cautioned investors that they that doesn’t suggest the automatic imposition of stimulus measures in order to achieve that goal. Further, they said that while the objective of the BOJ policy was to achieve sustainable growth, it should be done in tandem with stable prices.

As of this writing, the USD/JPY pair is lower at 79.36; sentiment on OpenBook is bearish by a ratio of 3 to 1. The EUR/JPY is higher at 99.83, and sentiment is nearly evenly divided among bulls and bears on OpenBook. Trader orchidea12 from Italy is relatively new to OpenBook, but has been actively trading the EUR/JPY, and has a 15.9% allocation which has gained 15.5% over the past month; over the past week and over the past week the trader increased that allocation to 25% with an identical gain. The trader closed several long positions over the past hour with profits which ranged from 2.20% to as high as 28.21%. The trader’s profits for last week were recorded at 125.1%, and for the month 25.9%.

OpenBook trader DagobertDug from Germany is off to a good start in trading on OpenBook; in the past day, the trader has had several Yen crossed trades closed in profit when they hit their respective SL. Most recently, a long EUR/JPY hit its SL with a 15.10% gain, while another long yesterday closed at a 22.70% profit. The trader has a 15.4% allocation in the EUR/JPY which has provided him with a 17.2% gain; a 5.1% allocation in GBP/JPY meanwhile has earned 15.1%. For the month, the trader has a 16.3% profit, which rises to 32.6% for the week.

While the Bank acknowledges that the Japanese economy is on the rebound, they want to ensure that their actions extend the positive momentum despite the headwinds they face with a global growth slowdown and the Eurozone’s crisis, which have both triggered the resurgence in demand for the Yen as a safe haven currency. At the bank’s May meeting, the central bank had declined to make any changes to its monetary policy, with some analysts speculating that it may want to preserve its options for if and when and the situation warrants.

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