FX.co ★ Yen Strengthens Despite Weak Trade Data

The Japanese yen strengthened to approximately 147.5 against the dollar on Wednesday, building on gains from the previous session despite disappointing trade figures. In July, exports decreased by 2.6% compared to the previous year, marking the largest decline in over four years due to the impact of extensive US tariffs on overseas demand. Imports also fell by 7.5%, though this was a better outcome than the anticipated 10.4% decrease, marking the fourth contraction observed this year. Additionally, it was reported that Japan's core machinery orders, a key indicator of capital expenditure, unexpectedly increased in June after experiencing two months of decline. On the monetary policy front, there is division among market analysts regarding the future actions of the Bank of Japan, given the mixed messages from its officials. Governor Kazuo Ueda has maintained a cautious approach, emphasizing that "underlying inflation" remains below the BOJ's 2% target.