Japan on Wednesday reported its first annual trade surplus since 2011 Fukushima nuclear disaster. Data released by the Ministry of Finance on Wednesday showed that Japan posted a 4.07 trillion yen ($35.8 billion) annual trade surplus last year, the first since 2010. The data on Wednesday also showed that Japanese exports snapped run of declines and rose for the first time in 15 months in December. 

The trade data should be welcome news for the Bank of Japan, which is seen maintaining an upbeat view on the economy. BoJ Governor Haruhiko Kuroda at the World Economic Forum at Davos was optimistic that Japan's economy is likely to head toward a sustainable growth path as global trade and manufacturing activity pick up.

Bank of Japan’s (BoJ) first 2-day monetary policy meeting for 2017 is scheduled to be held on January 31. We foresee that the central bank will remain committed to hold its 10-year JGB yields near zero, while keeping interest rate steady at -0.10 percent.

Markets will be closely watching the release of December consumer price inflation data, scheduled for Friday. Inflation and consumer spending have been weak, and firms have been reluctant to boost wages, dragging on Abe’s plans to buoy Japan’s once-booming economy.

The yen makes solid comeback, regained bullish momentum on upbeat Japanese trade data. USD/JPY was trading at 113.48 at the time of writing, down 0.25 percent on the day. Technical indicators on weekly charts support downside. Stochs are rolling over from overbought and MACD is on verge of a bearish crossover. We see scope for test of weekly 200-MA at 109.53. Bearish invalidation above weekly 5-MA at 115.20.

Japan’s Nikkei 225 closed 1.45 percent higher at 19,061. FxWirePro's Hourly Currency Strength Index at 1200 GMT showed yen hourly strength remained neutral at -3.83747 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend).

For more details, visit http://www.fxwirepro.com/currencyindex.