Asia FX muted, dollar fragile as CPI data boosts Sept rate cut bets
Investing.com-- Japan’s trade balance grew less than expected in February as the country’s key exports, while growing sharply from last year, still missed expectations amid heightened concerns over U.S. trade tariffs.
Trade balance rose to a surplus of 584.5 billion yen ($3.91 billion), government data showed on Wednesday. The print was weaker than expectations for a surplus of 722.8 billion yen, but improved from a deficit of 2.76 trillion yen in January.
The softer surplus was driven largely by weaker-than-expected exports growth. Exports grew 11.4% year-on-year, missing expectations of 12.1% but picking up from the 7.3% pace seen in January.
Japanese exports rose sharply over the past two months, in part aided by stabilization in Japanese manufacturing activity. But the biggest drivers of export growth were businesses front-loading their overseas shipments before U.S. President Donald Trump imposes more trade tariffs in the coming months.
Trump has threatened to impose import tariffs on key sectors such as automobiles and commodities in early-April. The U.S. President said he will also impose reciprocal tariffs against the U.S.’ biggest trading partners.
Beyond the U.S., Japanese exports to China were also pressured by soft, albeit improving demand in the world’s second-largest economy.
Domestic demand in Japan was seen cooling further, with imports unexpectedly shrinking 0.7% y-o-y against forecasts for 0.1% growth.
Private consumption in Japan was seen cooling over the past quarter as the effects of high wages were baked into the economy. But this trend is expected to be offset by a new round of bumper wage hikes in the coming months.