Japanese Yen Shrugs off Solid Tankan Data

This morning, the Japanese yen, across the board and in the benchmark USD/JPY Forex market, shrugged off a solid print of the Tankan business survey released by the Bank of Japan.

This key business survey, and manufacturing index, came in at its highest level since September of 2007. It printed at 22 which was well above the expected print of 18. The large manufacturing outlook index print came in at 19. This was also well above the expected print of 16. Small manufacturing businesses also did well. Output was at its best level since 2006. The survey was not all good news though. A few outlook indices missed forecasts. Planned capital expenditure also missed the mark.

With things said, the Japanese manufacturing survey did show that the Japanese economy was heading into the final quarter in good shape. Right now, the yen is disconnected from its own country’s economic numbers. Last week, the manufacturing data was similarly solid. It also failed to excite the yen.

The Japanese Yen is strongly watching the BOJ

The Bank of Japan’s monetary policy decision, is that it’s ultra-accommodative will not change until its annual consumer price inflation is sustainably above their target of two percent. Right now, the core CPI is at 0.7 percent. This means that there is a long way to go. While the central bank sticks to that course, the nation’s economics has little chance of impacting monetary policy. That is why the yen was little changed this morning on the data.

This disconnect was seen this morning. There were market holidays in China and Australia, which thinned out trade volume, as well. There is also an election in the near term in Japan. This means that data will be in the background of investor decisions until the results are known, of the looming elections, at the end of this month.