Japan's factory mood in July hits highest since late 2018 – Reuters Tankan

As per the latest Reuters Tankan poll data for June 30 to July 09 period, Japanese manufacturers’ business confidence rose in July to hit a more than two-and-a-half-year high.

Key quotes

The Reuters Tankan sentiment index for manufacturers rose to 25 from 22 in June, its highest since November 2018.

The service index fell to minus 3 from a flat reading the prior month.

The country’s export-driven recovery remained intact thanks to solid global demand.

But in a worrying sign, service-sector sentiment turned pessimistic, as firms struggled with the fallout from the coronavirus crisis, which tracks the Bank of Japan’s (BOJ) closely watched tankan quarterly survey.

The BOJ’s own ‘tankan’ business survey out this month also showed business confidence improved to a two-and-half-year high, while service-sector sentiment turned positive for the first time in five quarters.

Manufacturers’ business confidence was seen improving further to 28 in October, while that of service-sector firms was expected to rise to 8, a slightly lower forecast for three months out than that of the previous month.

FX reactions

USD/JPY fails to react to the update, seesaws around 110.60, as market players stay cautious ahead of Fed Chairman Jerome Powell’s testimony.

Read: Powell Preview: Three reasons to expect the Fed Chair to down the dollar