Q2 GDP in Japan was not as bad as expected. The revision of the GDP data resulted in a fall of only 0.3% qoq . And the current account balance for July recorded a decent plus, as had been the case in previous months. However, the latter statistic has to be taken with a pinch of salt.



The encouraging current account is mainly due to a higher primary budget balance and therefore probably mainly due to higher yen net income from abroad. However, this component of the current account is notoriously volatile. In particular the JPY weakness in the summer is likely to have increased it notably.



The more decisive component of the current account, one that is more stable, the balance of the goods and services, remains close to zero. This component's recovery of the past 1½ years seems to have come to a premature end.



"The structural difficulties in Japan do not seem to have been overcome. This points to the fact that the country needs further JPY weakness in the future, certainly not a signal to buy yen", says Commerzbank.