The yen continues to be under pressure due to strong economic data from the United States.

The Japanese yen has weakened further, falling below 149.5 yen per dollar once again, nearing its previous high of 149.86 yen per dollar. This could potentially trigger Japan to intervene in the foreign exchange market to support the yen's value. Additionally, the yen continues to have a tendency to depreciate further due to significant pressure from the US dollar, driven by strong economic data from the United States announced last week, which remains robust, leading investors to believe that the Federal Reserve (Fed) will maintain its high-interest rates going forward.

It is possible that Japan may choose to intervene in the foreign exchange market to prevent further depreciation of the yen. However, Naoyuki Shinohara, a former top currency diplomat in Japan, has stated that Japan is currently not inclined to fight the depreciation trend of the yen through foreign exchange intervention, as it would involve excessive budgetary spending and is unsustainable.

Japan's trade balance has turned back into surplus with a surplus of 62.44 billion yen in September, higher than market expectations of a 425 billion yen deficit. This trade surplus is the largest since 2021, with a slight increase in imports and a substantial increase compared to the previous month.

Imports to Japan contracted by 16.3% YoY but increased by 2.28% MoM, totaling 9,135.70 billion yen in September. Notably, imports of fuel decreased significantly by 37.8%, including a 32% drop in crude oil and a 44.8% decrease in LNG, leading to a substantial reduction in imports from Russia, primarily an energy exporter, by up to 50.4%. The rise in crude oil prices, the weakening yen, and reduced imports have had a positive impact on better control of inflation.

Japan's exports increased by 4.3% YoY and surged by 15.06% MoM, amounting to 9,198.14 billion yen in September. This export growth was boosted by increased orders from the United States, up by 13%, and strong sales in Hong Kong, which increased by 21.8%. The majority of exports still consist of machinery and automobiles.

The yield on Japan's 10-year government bonds increased to over 0.8%, following a global trend of rising bond yields due to stronger-than-expected economic data in major economies. However, the significant increase in Japan's government bond yields may pose risks to the overall economy, prompting the Bank of Japan to announce that it will buy more 5-10 year government bonds to prevent yields from rising too high, setting a cap at not exceeding 1%.

Techical analysis data (5H)

Resistance: 149.92, 150.03, 150.15

Support: 149.68, 149.55, 149.45

Source: Investing.com