Forex Trading Tips: Economic Indicators for Japan

When getting started with a forex trading platform, it is important to pay attention to forex trading resources that serve as economic indicators. With these FX trading factors, the best investors will be able to predict the market shifts and turn a profit with their forex broker. These are the economic indicators for Japan and the Yen.

Quarterly Tankan Survey of Business Sentiment

This is a quarterly poll of business confidence that is compiled by the Bank of Japan. The report shows the status of the Japanese economy and is considered to be one of the key financial measures for the country. A forex broker or trader who is invested in Japanese currency might want to keep track of these reports and their findings.

Manufacturing and non-manufacturing sectors of the economy and capital expenditure are taken into account. The report also gives an outlook for future business expectations and economic trends.

The Tankan survey generally has a considerable amount of influence on both stock prices and currency rates. The market has been known to react directly to its release, which always occurs on the first Monday following the reporting period.

Japanese Trade Balance

Trade balance is a strong economic indicator for many countries. In Japan, the economy is led highly by exports, and trade data gives critical insights into the market’s development and into future changes to foreign exchange rates. The changes will be of particular interest to those involved with FX trading.

Japan’s monthly Trade Balance report is released by the Customs Office of the Ministry of Finance and has a significant effect on markets. Because Japan’s economy is so export oriented and because it has historically experienced such large trade surpluses, changes will have dramatic consequences for the domestic economy.

Surpluses indicated by a positive trade balance will appreciate the Yen. Deficits indicated by a negative trade balance will depreciate the Yen.

Japanese Gross Domestic Product Quarterly (GDP)

Gross Domestic Product is generally calculated with the following formula:

GDP = C + I + G + (EX – IM)
C = private consumption
I = private investment
G = government expenditure
EX = exports of goods and services
IM = imports of goods and services

This comprehensive measurement of a country’s overall production and consumption of goods and services serves as one of the primary indicators of overall economic well-being. GDP growth means that the level of economic activity has been heightened, and such activity tends to benefit trade flow and encourage foreign investment, such as that coming in through forex trading platforms. A higher Japanese GDP will likely lead to higher demand for the Yen. However, this economic growth can also cause worry about inflation. Monetary authorities may increase interest rates in response.

The Economic and Social Research Institute is in charge of compiling the report for Japan and releases the findings once every quarter. The market tends to react strongly to the release, and FX trading is often affected by this forex resource.

Bank of Japan Monetary Meeting and Announcement

The Policy Board of the Bank of Japan holds a monthly two-day meeting. During this meeting, members discuss foreign and domestic economic developments in order to determine the need for interest rate adjustments or other changes to the country’s monetary policy.

Economic growth, employment rates, and government recommendations are taken into account by the members, who chiefly try to maintain price stability. Their “Guideline for Money Market Operations” is established at each meeting and often has significant and far-reaching consequences for bonds, mortgages, consumer loans, and the exchange rate of the Yen.

The market is known to react directly to the Bank of Japan’s collective outlook on the economy. Their report often holds clues about future monetary policy decisions, which can be even more important than current conditions. The report is also a good forex resource for those involved with forex trading.

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