Japan’s rising trade gap and weak GDP data weigh on the Yen despite broader USD weakness from US Treasury buyback plans.
The Japanese Yen (JPY) pared gains against the US Dollar (USD) on Friday, trading at 158.60 after data showed Japan’s trade deficit widened to JPY634.5 billion in July. The deficit, up from JPY409 billion in June, was driven by a 27.8% surge in imports, fueled by higher energy and semiconductor costs.
The figures follow weaker-than-expected GDP data earlier in the week, raising doubts about the Bank of Japan’s ability to tighten monetary policy further. Meanwhile, the USD found limited support as the US Treasury announced plans to double long-term debt buybacks to $4 billion per auction.
The Yen had earlier strengthened 0.9% on Wednesday amid broad USD weakness, but the trade data reversed some of those gains. US 30-year Treasury yields hit a 19-year high of 5.33% this week, adding pressure to global bond markets.