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Japanese exports rose at their fastest pace in three years, jumping 18.6% on year in October vs 11.5% in September and beating consensus of 16.5%.
Exports also rose 4.4% in volume terms, suggesting that Japan is not just relying on the weak yen to boost trade. Car shipments were particularly strong, surging 31.3% in yen terms and 7.5% in in volume terms.
Imports jumped 26.1% vs +16.5% and +19%, again driven higher by soaring fuel costs.
The trade deficit rose to ¥1.09T ($11B) from ¥932.1B and was above forecasts for ¥813.5B.
The Nikkei is -0.3%, while the USD-JPY is flat at ¥100.13. (PR)
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The Nikkei continues a big rally this week, up 2.1% overnight and now higher by about 6% this week. Boosting the action last night was Finance Minister Tara Aso saying the government still has the option of intervening in currency markets. This had the yen (FXY) falling further and allowed dollar/yen to bust through ¥100 for the first time since about Labor Day.
"The view that tapering of stimulus won’t happen for a while is spreading,” says one fund manager. Taper? Japan? Yikes.
Separately, Nomura's Norikazu Akedo says the government must continue to feed the monkey or the Nikkei could fall 20%. “Worldwide investors are breathlessly watching the future of Japan,” he says. “We want the government to send out strong messages to foreign and local investors.”
As expected, the Policy Board of the Bank of Japan has maintained its program of expanding the monetary base at an annual rate of ¥60-70T ($611-713B) a year. (PR)
The BOJ said it is making steady progress in achieving its target of 2% inflation, and reiterated that it expects CPI of 1.3% in 2014-15 and 1.9% a year later.
The central bank slightly increased its 2014-15 GDP growth outlook to 1.5% from a prior prediction of 1.3% but maintained its 2015-16 forecast at 1.5%.
The BOJ warned that "overseas economies are performing somewhat weaker than projected" in its April semi-annual report. However, the bank expects those economies "to gradually pick up," mainly in advanced areas.
The Nikkei is -1.2% and the USD-yen is -0.2% at ¥98.32. (PR)
Japanese industrial output rose 1.5% on month in September after dropping 0.9% in August but missed consensus of +1.8%.
On year, production jumped 5.4% after falling 0.4%.
Japan's trade ministry forecast that output would increase 4.7% on month in October and then drop 1.2% in November.
"Production is on a positive trend because of domestic consumer demand, but this could plunge after the (sales) tax hike next year," said JPMorgan economist Masamichi Adachi. "Exports are the biggest risk to output now due to slowing global demand."
The Nikkei is +1.3% and the yen is flat at ¥98.20 to the dollar. (PR)
Japan September exports: +11.5% versus +15.6 expected and +14.6% previous.
Japan September imports: +16.5% versus +20% expected and +16% previous.
The big exports miss seems to suggest that "the positive effect of the weak yen may have run its course," RBS' Junko Nishioka notes. Exports to Asia were up just 8.2% Y/Y last month versus 13.5% in August, Reuters notes.
The Nikkei is +0.8%, shrugging off the lackluster data as the yen is 0.26% weaker against the dollar to ¥97.96.