Yen Weakens as Japan's Trade Deficit Hits Record High

The Japanese Yen has weakened against the US Dollar due to Japan's widening trade deficit. In July, the country's merchandise trade balance showed a deficit of JPY 634.5 billion, the largest shortfall since January.

Imports outpaced exports, rising by 27.8% year-on-year to JPY 12,146.3 billion, while exports climbed 23.2% year-on-year to JPY 11,511.8 billion.

The USD/JPY pair traded around 158.50 during Asian hours on Thursday, with strategists at Societe Generale remaining cautiously optimistic about the Yen's medium-term outlook.

However, they emphasize that any notable rebound will depend on specific catalysts, such as renewed official intervention in the foreign exchange market or a clear decline in energy prices.