- The Bank of Japan’s Tankan survey was quite sold
- Expectations were patchy but perhaps less so than they might have been given geopolitical worries
- However the Yen market was focused elsewhere
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The Japanese Yen market remained focused elsewhere Friday and didn’t react much to a satisfactory Tankan survey from its home country.
The large manufacturing current conditions index rose to 25 from 22, slightly beating the 24 expected in the process. Large non-manufacturing firms scored 23, the same as before and just below the 24 level forecast. Outlooks were mixed with large manufacturers slightly more downbeat than expected. They scored 19, no worse than last time but a bit weaker than forecast.
Capital expenditure increase for all large industry came in at 7.4%, below both the 7.5% expected and the previous survey’s 7.7%. Overall this was a modestly positive snapshot of the Japanese corporate mood and even the outlooks could probably be classed as quite impressive given the unusual levels of geopolitical uncertainty which prevail. The Tankan is a highly influential piece of Japanese domestic economic data, compiled and released four times annually by the Bank of Japan.
However, the foreign-exchange market remains focused on the US Dollar following this week’s Federal Reserve policy decision. The Yen gained some ground in the wake of that but the greenback seems to have found a footing against it which was not noticeably loosened by the Tankan. Japanese monetary policy is famously unlikely to alter unless inflation climbs sharply and sustainably, which limits the ability of other economic numbers to influence the currency.
However, that weakness has taken the pair below a short-term uptrend line which had been firmly in place since late November. A weekly close below this line would look quite bearish for the Dollar and might well put those November lows in the 110.80 area back in focus.
--- Written by David Cottle, DailyFX Research
Contact and follow David on Twitter:@DavidCottleFX