Asian currency markets were relatively quiet this morning. The Japanese yen eased against both the euro and the greenback to trade at 138.47 and 102.21. Yen traders were upset by disappointing trade balance data released this morning which showed a plunge in exports. The Japanese Yen depreciated around 0.3 percent yesterday on the back of upbeat market sentiments in later part of the trade which led to fall in demand for the low yielding currency. The Yen touched an intra-day low of 102.24 and closed at 102.14 on Tuesday. Japan’s Trade Balance was at a deficit of 0.86 trillion Yen in May from earlier deficit of 0.88 trillion Yen in April. The country’s trade deficit stood at ¥909.0 billion last month, marking the 23rd straight month of red ink but contracting 8.3 percent from a year earlier, the Finance Ministry said in a preliminary report. The value of imports fell 3.6 percent to ¥6.5165 trillion, down for the first time in 19 months, with those of crude oil plunging 15.1 percent and of coal plummeting 24.4 percent, suggesting production activities have been petering out after the tax hike.
Exports also decreased for the first time in 15 months, declining 2.7 percent to ¥5.6076 trillion, as those of marine vessels and automobiles dropped 32.5 percent and 4.3 percent, respectively. Car shipments fell for the first time in 14 months.
Most currencies were relatively flat as traders focus on the FOMC rate decision due later in the day. The Fed is expected to continue its current tapering program. The marquee event will be Janet Yellen’s press conference, where traders are hoping as some insight into future rate increases. The US dollar is flat this morning at 80.71 while the euro is in the green by 1 point at 1.3547. The Aussie is slightly in the red at 0.9334 after RBA minutes on Tuesday upset traders after the shift in attitude of members to a more dovish stance. The NZD is completely flat at 0.8658 but remains well above its trading average supported by the interest rate increase map provided by the reserve bank last week. The New Zealand “current account” was a deficit of $0.6 billion in the March 2014 quarter, Statistics New Zealand said today. This is $0.3 billion smaller than the December 2013 quarter deficit.
Elsewhere the pound is trading in the green at 1.6962 showing very little reaction to the CPI and PPI lackluster print on Tuesday, consumer inflation printed below expectations but well within range. The biggest market surprise was the German ZEW economic sentiment which tumbled well below expectations.
Even though violence in Iraq continued to escalate on Tuesday and the Russia-Ukraine conflict tenses after Russia cut off the gas flow to the Ukraine traders seemed to pay little attention.