Japan's exports grew more slowly than expected due to a slump in car shipments due to a shortage of raw material for semi-conductors. Yen further slumps versus the US Dollar amid expectations of a Fed Rate Hike.
On Wednesday (17/November), Japan's cabinet office released data on exports which increased 9.4 percent year-on-year in October.
This figure is much lower than the 13.0 percent growth rate in September, while also missing economists' projections for a 9.9 percent increase.
Car shipments slumped by 36.7 percent due to supply constraints of semi-conductor raw materials.
In addition, global supply chain bottlenecks have also clouded Japan's future trade prospects.
"While automakers were planning to ramp up production in November and December to 'revenge' to cover the previous month's declines, a shortage of semi-conductor materials expected to last until the end of the year prevented that plan from being achieved," said Ryosuke Katagi, market economist at Mizuho Securities. . He added that the slowdown in Japan's export trend is likely to last until the rest of 2021.
Japan's exports to China slowed from 10.3 percent to 9.5 percent as auto shipments slumped 46.8 percent.
Meanwhile, exports to the US only increased 0.4 percent, also weighed down by a decrease in car shipments that reached 46.4 percent.
In line with the stagnation of Japanese car exports, data on machine orders (Machinery Orders) also slowed from 17.0 percent to 12.5 percent.
This data is quite important because it is an indicator of capital expenditure for the next six to nine months.
The weaker machine orders data reflects the reluctance of Japanese companies to commit to stronger capital spending.
Meanwhile, Japan's imports rose by 26.7 percent YoY in October.
This figure decreased significantly compared to 38.6 percent growth in September.
Slowing Japanese imports indicate fragile domestic demand and supply chain bottlenecks that have sent commodity prices soaring.
USD/JPY Strength Still Stable
In general, the release of Japanese trade data this morning did not have a high impact on the movement of the Yen against the US Dollar.
The USD/JPY pair is observed to be in the range of 114.78, still tends to be bullish, especially after the release of US retail sales data last night which further supports the prospect of a Fed Rate Hike.
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