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Japan the Main Focus this Week

By:
Barry Norman
Updated: Jan 1, 2011, 00:00 UTC

This week ends with Japanese Emperor Akihito celebrating his 78th birthday. In Japan the birthday of the reigning emperor is a national holiday and the

Japan the Main Focus this Week

This week ends with Japanese Emperor Akihito celebrating his 78th birthday. In Japan the birthday of the reigning emperor is a national holiday and the markets will be closed.

This is likely to be a hectic week in Japan. There is key trade and economic data as well as a meeting of the Bank of Japan.

Beginning Wednesday December 21st, the Finance Ministry is set to release the November trade figures, which the markets will be watching very closely. Japan is the worlds #3 economy, at it is very important to note the surplus or deficit in their trade account. Japan has been suffering all you, due to the recovery from the hurricaine and sumomi that weaked havoc on the island, destroying their major nuclear power plant and releasing radiation through the surrounding cities and towns. Japan has been slow to recover.

 

Just a few months ago, in October, the flooding in Thailand, the escalating European debt crisis and a continuously strong yen all helped to push Japan to a ¥273.8 billion ($3.52 billion) trade deficit, despite expectations for a surplus. A surplus is expected in this weeks reports.

The most distressing about the October figure  was a 7.7% year-on-year drop in Japanese shipments to China.

Early data from HSBC’s monthly Chinese manufacturing survey, distributed this past week, showed manufacturing there remained in contraction, so Japan’s November trade balance with China will bear watching.  A slowdown in manufacturing in China, will spell disaster for the global markets.

The Bank of Japan is due to announce the outcome of its latest policy meeting also Wednesday toward the end of the day. These annoucements could cause a ripple effect at the opening of the European Markets.

The BoJ is almost certain to keep its interest-rate target unchanged at a 0-0.1% range, but it could announce additional easing measures, or further tweak its economic outlook.

During the past 10 days, the Bank of Japan offered banks more in three-month U.S.-dollar loans than at any other time in years, seeking to ease a dollar-funding crunch as lenders sought to meet year-end requirements.

The Bank of Japan’s also released their  “tankan” survey of business sentiment, with manufacturers reporting worse-than-expected conditions. At last months meeting, the central bank cut its outlook citing a downtrend in overseas economies and the strong yen, and a further downgrade at the upcoming meeting is a possibility.  This comments will give the first look at where the global economy is presently and what we should see for January 2012.

It will be a busy week for the yen and the Bank of Japan, they will most definitely need the holiday come the end of the week.

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