Reuters Tankan large manufacturing index negative, 1st time since the start of 2021

• Big manufacturers index -6 in January vs +8 in December, the first negative reading since January of 2021
• Big non-manufacturers index +20 in January vs +25 in December
• Japan manufacturers April index seen at +6, non-manufacturers at +15

The slump in confidence amongst large manufacturers is not a positive sign for ongoing wage hikes. Both the Japanese government and Bank of Japan have been urging firms to raise wages in order to achieve stable inflation.

Service sector sentiment is stronger. In December it hit its highest in more than 2 years, so the dip in January is not overly concerning.

Later on Wednesday, Japan's central bank will wrap up a two-day policy-setting meeting. Last month it kept its ultra-easy policy but shocked markets with a surprise tweak to its bond yield control that allows long-term interest rates to rise more. Speculation is also rampant in financial markets that the Bank of Japan - an outlier among global central banks aggressively hiking rates - will move to phase out dovish Governor Haruhiko Kuroda's policies of massive stimulus when he steps down in April. The Reuters Tankan survey, conducted from Dec. 23 to Jan. 13, canvassed 495 Japanese large non-financial firms capitalised 1 billion yen ($7.8 million) or more, of which 250 responded. Companies respond on condition of anonymity.

---

The Reuters Tankan is monthly and is aimed at pre-empting the Bank of Japan's own tankan report, which is quarterly.

The Reuters Tankan survey was conducted from December 23 to January 13

• canvassed 495 Japanese large non-financial firms capitalised 1 billion yen ($7.8 million) or more, of which 250 responded.
• firms respond on condition of anonymity

---

Still to come today, and a focus for the market, in the Bank of Japan policy statement. Due in the 0230 to 0330 GMT time window (2130 - 2230 US ET).

Previews of the Bank of Japan meeting:

• TD say still plenty of room for yen gains, see as low as 120 by the end of March
• Bank of Japan preview - "may be on the verge of its biggest policy change in decades"
• The hyenas are circling the Bank of Japan
• 10-year JGB yields still pushing the limit for now
• The risks are skewed towards disappointment for yen bulls this week

• Goldman Sachs ask how low could USD/JPY fall if the BOJ exit YCC (spoiler, under 125.00)

• With the Bank of Japan ahead, what don't the USDJPY sellers want to see technically

• Why the best trade is to be long JPY into the BOJ - Deutsche Bank

• How much will USD/JPY move on today's Bank of Japan decision?

• Soc Gen will buy yen if the BOJ disappoints yen bulls - awaiting "attractive entry levels"

Bank of Japan Governor Kuroda will hold his regular press conference from 0600 GMT (0100 US ET)

jpy JPY The Japanese yen (JPY) is the official currency of Japan and at the time of writing is the third most-traded currency in the world behind only the US dollar and euro.The JPY is used extensively as a reserve currency and is relied upon by forex traders as a safe haven currency.Originally implemented in 1871, the JPY has had a long history and has survived multiple world wars and other events. This was followed by the creation of the Bank of Japan (BoJ) in 1882 and the full oversight of the JPY by The Japanese yen (JPY) is the official currency of Japan and at the time of writing is the third most-traded currency in the world behind only the US dollar and euro.The JPY is used extensively as a reserve currency and is relied upon by forex traders as a safe haven currency.Originally implemented in 1871, the JPY has had a long history and has survived multiple world wars and other events. This was followed by the creation of the Bank of Japan (BoJ) in 1882 and the full oversight of the JPY by Read this Term