Japan’s trade deficit for September amounted to JPY 536.6 billion, reflecting a deceleration in both export and import growth. Japan’s Finance Minister Katayama affirmed the importance of close coordination with the Bank of Japan, emphasising a focus on enhancing supply capacity growth while avoiding inflationary pressures. Markets are assessing US inflation data in conjunction with Fed Chair Warsh’s neutral position as the October meeting approaches. USD/JPY gains ground after registering modest losses in the previous day, trading around 158.30 during Asian hours on Wednesday. The Japanese Yen encounters increasing difficulties following the recent publication of Japan’s Ministry of Finance merchandise Trade Balance report. Japan’s trade deficit expanded notably to JPY 536.6 billion in September, a decrease from JPY 1,111.9 billion in August. This shortfall significantly surpassed market expectations of a JPY 181.0 billion deficit and represented the nation’s fifth consecutive monthly trade deficit.
Japan’s imports increased by 18.9% year-on-year, reflecting a deceleration from August’s 28.0% rise and falling short of the anticipated 19.6%, representing the slowest growth rate since May. Meanwhile, exports increased by 16.7%, falling short of the anticipated 20.1% and marking their slowest growth rate in five months. Despite the overall deceleration in imports, crude oil imports surged by 51.1%, indicating Japan’s continued efforts to diversify its energy supply in response to geopolitical tensions in the Strait of Hormuz. On the policy front, Japanese Finance Minister Satsuki Katayama stated on Wednesday that the government is coordinating closely with the Bank of Japan, emphasising that there is no major divergence regarding the inflation outlook or monetary policy. She noted that while tax cuts stimulate demand and lead to price increases, the government will adopt a proactive and responsible fiscal policy aimed at enhancing Japan’s supply capacity without triggering inflationary pressures.
In the United States, recent economic data indicated that CPI inflation experienced an acceleration in September. However, markets continue to assess the Federal Reserve’s path forward following recent remarks from Fed Chair Kevin Warsh. Chair Warsh indicated that he does not “prejudge” interest rate decisions, providing no definitive indication regarding the central bank’s intentions to either raise or maintain rates at its forthcoming October policy meeting. In the daily chart, USD/JPY is positioned at 158.30. The pair exhibits a bullish near-term bias as the spot price remains above both the nine- and 50-day Exponential Moving Averages, thereby sustaining the broader uptrend.
The 14-day Relative Strength Index around 54 indicates a stable, non-overbought momentum, providing buyers with the opportunity to continue their advance, while the FXS Fed Sentiment Index at 127.51 suggests a persistently supportive policy environment. On the downside, initial support is situated at the nine-day EMA at 158.20, followed by the 50-day EMA at 158.08. These levels collectively establish a proximate demand zone that reinforces the bullish structure. As long as USD/JPY remains above these moving averages, the technical outlook suggests a preference for additional upward movement. Conversely, a daily close beneath 158.08 would indicate a waning momentum and potentially lead to a more pronounced corrective phase.
