FXStreet (Delhi) – Lee Halpenny, Currency Strategist at MUFG, suggests that the Tankan survey is unlikely to materially reinforce the case for further monetary easing from the BoJ on its’ own although expectations are likely to continue to build given ongoing weakness in the hard economic data which has increasingly provided evidence that Japan’s economy may have entered technical recession in Q3.
Key Quotes
“Business confidence has also held up better than feared in the latest Tankan survey which was released overnight in Japan. The survey revealed that business conditions for all enterprises from all industries increased by 1 point to +8 in Q3 which was better than forecast in the previous survey.”
“However, businesses have become less optimistic about the future. The forecast for business conditions for all enterprises from all industries was 3 points below current conditions at +5. The breakdown revealed that large manufacturers have experienced the largest decline in business confidence with further weakness expected in the coming quarter.”
“Weakness was especially marked amongst large manufacturers of petroleum and coal products. In contrast, business confidence amongst large non-manufacturers improved and has held up better as well at small and medium-sized enterprises. It was also notable that the diffusion index for output prices both for large and small enterprises declined by more than forecast in the previous survey, and output prices are in general expected to decline further in the coming quarter.”
“Overall the Tankan survey was better than feared although it still signalled some deterioration in the outlook for business confidence and downward pressure on output prices.”
(Market News Provided by FXstreet)