Japan's Current Account Balance November

value relative to the dollar. Such a rise in the yen would also increase demand for Japanese government bonds, with the central bank buying 1.8 trillion yen of bonds a month and potentially more to help the government fight deflation. However, Finance Minister Kan has argued that the yen should be weakened to stimulate exports rather than strengthened, as his predecessor, Fuji, did last year when he was in office. Most traders also predict that Japan will maintain a weak yen to prevent deflation and support exports. The conflicting views are still being considered and have not yet reached a final conclusion, so economists' predictions will have a short-term impact on the foreign exchange market. In addition, at the end of the trading day, the Japanese Ministry of Finance announced a current account surplus of 1,304.8 billion yen, which was much better than the forecast of 1,220.0 billion yen. It means that residents' income from non-residents is larger than their expenditure. It is an indispensable part of macroeconomic analysis for an open economy. In particular, it has the ability to directly and quickly affect important economic indicators such as exchange rates, economic growth and inflation. During this time, Japan's basic balance also decreased less than expected. In the context of countries tightening spending, Japan, a country that has relied on exports to develop its economy since World War II, has been severely affected, causing the balance surplus to decline for 14 months. However, although the surplus has decreased very quickly, it is still slower than expected, which has brought more optimism to economists. In addition, the new finance minister Naoto Kan's policy of maintaining a weak yen has given Japanese exports a new boost.

Table 2.4 Japan's current account balance in November

Maybe you are interested!

Table 2.5 Japan's November Trade Balance

On January 12, two opposing streams of information from two countries created a sharp decline for the USD/JPY exchange rate pair. At 5:00 GMT, the Japanese Cabinet Office released a summary of the development trends of each region . This is a survey based on the specific economic situation of each locality, through which it is possible to predict the general economic development trend in the short term for the entire Japanese economy. The higher the index, the better and vice versa. In recent years, it has dropped to 17.6 points, the lowest in early 2009 when the economy was really stagnant in all regions and industries in Japan, but now it is gradually recovering and has reached 36.3, higher than the previous month. In contrast, in the US, the trade deficit is larger than the previous month and larger than the government's estimate. The Bureau of Economic Research and the Census Bureau have continuously announced disappointing information about the trade deficit.

The US trade deficit has not only not decreased but has been increasing since April 2009. The US is a country that always leads in the proportion of international trade, ranking 3rd in export output, the main export products are machinery, equipment, motorcycles, aircraft, food and beverages. And the key partners in trade are Canada, the European Union, Mexico, China and Japan. The total export value in January was 91,842 million dollars but the import value was even larger, reaching 136,499 million dollars. The US is an export power but also an import power. Most of the imported goods come from the European Union, China, Mexico and Japan. At 21:30 GMT on January 12, API announced the weekly crude oil reserves of the US. This week, the number of crude oil barrels increased by 1.2 million barrels, which shows that the demand for oil has increased again compared to last week. Increased demand for oil also means that oil prices will increase, which is not beneficial for countries that import a lot of crude oil like the US. The consumer confidence index for the next week was announced immediately after that and also brought only sad news for the US economy. It was compiled by Washington magazine and ABC news. This index fell to only -47 points last week. It reflects the current financial situation of the people, which is a worrying issue for them, they think that they have to save more than they spend to have reserves for the not-so-bright future ahead. These signs dragged the market down with the opening price of 92,095 and the closing price of 91,097.

Returning to the technical analysis, the 4-hour and one-day charts also clearly show the downward trend of prices in the past 4 days. The information on the foreign exchange market has been fully reflected on the chart through the results of trading members. Through the expressions of the chart, we can see that the optimistic information has been shown right in the upward trend of prices.

On the 6th and 7th, it broke out of the Bollinger Bands but then it tended to turn back and move between the fast and slow lines. The RSI also approached the 50 level and was likely to go down, confirming the previous trend of the chart. On the 9th candlestick, it established a Harami (Bullish) pattern in the red circle of a two-candlestick pattern, in which a small green candlestick is located within the body of a previous red candlestick. This pattern suggests that the previous trend is gradually ending. The market will go up. But the downward fluctuations are only between the 0.0 and 23.6 lines of the Fibonacci tool , which shows that it is still uncertain about the upward trend of the exchange rate line, and it can still easily continue to go down. And that's right, the bad news for the dollar continued to drag it down on January 10 and 11, and on January 12, due to the influence of conflicting information, unfavorable for the USD and favorable for the Yen to appreciate, the exchange rate line broke through the support level of 23.6. Trading volume in the market increased sharply due to the fear of cutting losses of some investors and others buying in the hope that it would be a new bottom of the market. Liquidity increased sharply at this time, the successful trading volume reached more than 50 million USD. In addition, to catch up and determine the market trend more accurately, we can use the ADX index, this index can overcome the weaknesses of RSI, which we will present in the following chart.

Figure 2.10 USD/JPY exchange rate developments from January 4 to January 12

The RSI line helps us avoid buying at overbought points and selling at oversold points, but it will lose its effect when the market follows a clear trend as shown in the figure below. On January 6 and 7, when the market was rising strongly, the RSI was only a weak upward line and when it went down as on days 9 to 12, the RSI just went sideways and reflected an unclear trend. On the contrary, the ADX is very effective when the market is directional, the uptrends and downtrends are clearly shown on the ADX chart. The combination of these two tools will be effective for us who want to maximize profits and avoid losses. The ADX includes 2 lines +DI and -DI representing the positive and negative momentum of the price. When the trend is clear, the +DI line will cross from below above the -DI line, and vice versa. The ADX is an average directional index for both uptrends and downtrends. This means that when the price increases or decreases in a clear direction (following a trend - an upward or downward trend), ADX exceeds 30, indicating that the trend is in the development stage. However, ADX is only an indicator based on past trends, so it is slower than what is happening in the market for a certain period of time. To minimize this disadvantage, we can also analyze the

The chart has a shorter time frame, for example 1h, 4h chart. With signs of a very rapid decline in just a few days, the exchange rate has decreased from 93.7 to 90.6 and at the end of January 12, the market also showed signs of recovery, at the same time the exchange rate line also crossed below the Bolingerband, a sign that it tends to return to the inside of the band, this could be the time for traders to buy and trade in the short term.

Figure 2.11 USD/JPY exchange rate developments, ADX and RSI indicators.

Figure 2.12 Head and shoulders pattern

Looking at the exchange rate chart, we can see that the head-shoulders pattern was formed after the price reached the peak of shoulder 1 at 92.7 points on January 6, then rose to a record of 93.73 points on January 7 and then reversed downwards. We can draw a horizontal line from the first bottom to determine a support point for the downward price trend after creating the Head peak. This line is the most important line in this model, often used to determine the support level for the market. At the end of the trading session on January 11, the exchange rate went down through this line, which is a sign of the end of the uptrend and a strong downward reversal. Not only that, the Fibonacci support level of 23.6 was also broken, which can be considered a sign that the exchange rate will go down very strongly in the market in the following trading sessions. And on January 12, the exchange rate fell sharply from the highest level of the day at 92.47 to the lowest level of the day at 90.7.

The “head and shoulders” pattern is one of many different types of chart patterns that are used to plan price strategies. Analysts measure the distance from the “head” peak to the asymptote of the chart and then subtract the distance from the asymptote’s break point to calculate how far the price might fall.

Transition to a new trend for the exchange rate of this currency pair. In general, the information that directly affected the market on January 13 was somewhat positive for the USD with good signals from the mortgage market, the new policy of the Federal Reserve, the monthly budget report... This information helped the USD/JPY exchange rate recover on January 13 and reach close to the level lost in the previous days. First, the information from Japan announced a sharp increase in equipment orders , which showed optimistic signals for the machinery manufacturing industry. It also means that the world economy is recovering, which has a positive impact on economic development in Japan. The value of the Yen was further strengthened. But information from the US showed that the recovery speed was even faster in many specific areas as well as in general. At 12:00 on January 13, the Mortgage Bankers Association announced that the number of loan applications increased by 14.3% compared to the previous week. This shows that the health of the housing market is starting to show signs of recovery. When housing prices increase, people tend to mortgage their homes and properties and borrow money from banks to spend more. This will boost the entire US economy. At 15:30, the Energy Information Administration said that crude oil reserves increased to 3.7 million barrels, much higher than the previous forecast of 1.4 million barrels. This is a sign of increase that has a significant impact on the US economy. The increase in oil reserves increases the demand for oil in the world, most oil trading contracts are calculated in dollars, leading to an increase in the demand for US dollars. However, in recent years, OPEC countries and some major countries have begun to limit the influence of the dollar on oil prices and have gradually switched to signing contracts in other currencies such as Yen, Euro and Sterling. For example, Russia has reduced the proportion of oil export contracts paid for in dollars from 67% to 65%. 19 GMT The Federal Reserve's Biege Book report outlines the general conditions of the economy.

Comment