Big manufacturers index -6 in January vs +8 in December, the first negative reading since January of 2021
Big non-manufacturers index +20 in January vs +25 in December
Japan manufacturers April index seen at +6, non-manufacturers at +15
The slump in confidence amongst large manufacturers is not a positive sign for ongoing wage hikes. Both the Japanese government and Bank of Japan have been urging firms to raise wages in order to achieve stable inflation.
Service sector sentiment is stronger. In December it hit its highest in more than 2 years, so the dip in January is not overly concerning.
Later on Wednesday, Japan’s central bank will wrap up a two-day policy-setting meeting. Last month it kept its ultra-easy policy but shocked markets with a surprise tweak to its bond yield control that allows long-term interest rates to rise more. Speculation is also rampant in financial markets that the Bank of Japan – an outlier among global central banks aggressively hiking rates – will move to phase out dovish Governor Haruhiko Kuroda’s policies of massive stimulus when he steps down in April. The Reuters Tankan survey, conducted from Dec. 23 to Jan. 13, canvassed 495 Japanese large non-financial firms capitalised 1 billion yen ($7.8 million) or more, of which 250 responded. Companies respond on condition of anonymity.
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The Reuters Tankan is monthly and is aimed at pre-empting the Bank of Japan’s own tankan report, which is quarterly.
The Reuters Tankan survey was conducted from December 23 to January 13
canvassed 495 Japanese large non-financial firms capitalised 1 billion yen ($7.8 million) or more, of which 250 responded.
firms respond on condition of anonymity
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Still to come today, and a focus for the market, in the Bank of Japan policy statement. Due in the 0230 to 0330 GMT time window (2130 – 2230 US ET).
Previews of the Bank of Japan meeting:
Goldman Sachs ask how low could USD/JPY fall if the BOJ exit YCC (spoiler, under 125.00)
Bank of Japan Governor Kuroda will hold his regular press conference from 0600 GMT (0100 US ET)
jpy
JPY
The Japanese yen (JPY) is the official currency of Japan and at the time of writing is the third most-traded currency in the world behind only the US dollar and euro.The JPY is used extensively as a reserve currency and is relied upon by forex traders as a safe haven currency.Originally implemented in 1871, the JPY has had a long history and has survived multiple world wars and other events. This was followed by the creation of the Bank of Japan (BoJ) in 1882 and the full oversight of the JPY by the Japanese government only in 1971.Japan has historically maintained a policy of currency intervention, continuing to this day. The BoJ also adheres to a policy of zero to near-zero interest rates and the Japanese government has previously had a strict anti-inflation policyWhat Factors Affect the JPY?The aforementioned role of the BoJ has dramatically shaped the JPY in forex markets. Any further changes in monetary policy by the central bank are closely watched by forex traders.Additionally, the Overnight Call Rate is the key short-term inter-bank rate. The BoJ utilizes the call rate to signal monetary policy changes, which in turn impact the JPY.The BoJ also purchases both 10- and 20-year Japanese government bonds (JGBs) on a monthly basis in order to inject liquidity into the monetary system. The consequent yield on the benchmark 10-year JGBs helps serve as a key indicator of long-term interest rates.Economic data is also very important to the JPY. The most important of these releases in Japan are gross domestic product (GDP), the Tankan survey (quarterly business sentiment and expectations survey), international trade, readings of unemployment, industrial production, and money supply (M2+CDs).
The Japanese yen (JPY) is the official currency of Japan and at the time of writing is the third most-traded currency in the world behind only the US dollar and euro.The JPY is used extensively as a reserve currency and is relied upon by forex traders as a safe haven currency.Originally implemented in 1871, the JPY has had a long history and has survived multiple world wars and other events. This was followed by the creation of the Bank of Japan (BoJ) in 1882 and the full oversight of the JPY by the Japanese government only in 1971.Japan has historically maintained a policy of currency intervention, continuing to this day. The BoJ also adheres to a policy of zero to near-zero interest rates and the Japanese government has previously had a strict anti-inflation policyWhat Factors Affect the JPY?The aforementioned role of the BoJ has dramatically shaped the JPY in forex markets. Any further changes in monetary policy by the central bank are closely watched by forex traders.Additionally, the Overnight Call Rate is the key short-term inter-bank rate. The BoJ utilizes the call rate to signal monetary policy changes, which in turn impact the JPY.The BoJ also purchases both 10- and 20-year Japanese government bonds (JGBs) on a monthly basis in order to inject liquidity into the monetary system. The consequent yield on the benchmark 10-year JGBs helps serve as a key indicator of long-term interest rates.Economic data is also very important to the JPY. The most important of these releases in Japan are gross domestic product (GDP), the Tankan survey (quarterly business sentiment and expectations survey), international trade, readings of unemployment, industrial production, and money supply (M2+CDs). Read this Term
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