Japan’s June trade balance, released today, showed a surplus of JPY 43 billion. The surplus was the first in 23 months, as market expectations were for a deficit of JPY 46.7 billion. The surplus was largely due to a combination of lower resource prices and higher exports.

This is good news for Japan, which has suffered from a trade deficit for almost two years, but it does not mean that this surplus will continue. This is because resource prices are showing signs of reversing.

In the foreign exchange market, the yen has strengthened a little due to a number of options nearing maturity around 140 yen to the dollar, the trade balance turning black and hedge funds adjusting their positions, but the yen is unlikely to strengthen dramatically as the government will basically continue its ultra-accommodative monetary policy.

Oh, and there is the Turkish Central Bank’s policy meeting today, where a rate hike of around 3.5% is expected, but if this level is not reached, there could be further Turkish lira depreciation.