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14 Dec 2015
JPY: Tankan survey provides further reassurance on Japan’s economy - MUFG
FXStreet (Delhi) – Lee Hardman, Currency Analyst at MUFG, notes that the yen is benefitting from the more risk-averse trading conditions in the near-term alongside further evidence that Japan’s economy is holding up better than initially feared.
Key Quotes
“Renewed weakness in commodity prices and emerging market assets, uncertainty over China’s foreign exchange policy, and the upcoming first rate hike from the Fed are all contributing to more risk-averse trading conditions in the near-term. The deterioration financial market conditions appear to be echoing developments from over the summer when similar concerns prompted a notable but temporary period of financial market instability. On that occasion the tightening in financial market conditions prompted the Fed to delay raising interest rates but appears less likely on this occasion.”
“The yen has also derived some support overnight from the release of the latest Tankan survey which will provide reassurance to the BoJ that the moderate economic recovery remains on track reducing the need for further easing in the near-term. The survey revealed that business confidence amongst large manufacturers and non-manufacturers both remained stable in Q4. However, large enterprises were more cautious about the future as outlook indices declined modestly. The updated capital spending plans were also broadly in line with expectations. The output price measures remained stable for non-manufacturers but softened for manufacturers although are unlikely to prompt too much concern at the BoJ.”
Key Quotes
“Renewed weakness in commodity prices and emerging market assets, uncertainty over China’s foreign exchange policy, and the upcoming first rate hike from the Fed are all contributing to more risk-averse trading conditions in the near-term. The deterioration financial market conditions appear to be echoing developments from over the summer when similar concerns prompted a notable but temporary period of financial market instability. On that occasion the tightening in financial market conditions prompted the Fed to delay raising interest rates but appears less likely on this occasion.”
“The yen has also derived some support overnight from the release of the latest Tankan survey which will provide reassurance to the BoJ that the moderate economic recovery remains on track reducing the need for further easing in the near-term. The survey revealed that business confidence amongst large manufacturers and non-manufacturers both remained stable in Q4. However, large enterprises were more cautious about the future as outlook indices declined modestly. The updated capital spending plans were also broadly in line with expectations. The output price measures remained stable for non-manufacturers but softened for manufacturers although are unlikely to prompt too much concern at the BoJ.”