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Germany’s media outlet, MNI, carries an editorial piece on Monday, citing that the Bank of Japan (BOJ) officials are concerned about the economic prospects in the July-September quarter (Q3) after the sharp Q2 GDP contraction.

Key takeaways

“A sharp contraction had already been discounted and the scale of the recovery in Q3 is a key focus. “

“BOJ economists were fully aware Q2 activity had been severely restricted by the coronavirus outbreak, with the wider hospitality and tourism industries particularly badly hit as a state of emergency was imposed and social restriction measures were put in place.”

“High-frequency data seen by BOJ officials have shown a slowing in consumer activity since mid-July, raising concerns that the Q3 recovery may be weaker than first expected. “

“Bank officials still see a recovery in Q3, although with many people staying home or steering clear of large, crowded areas as Covid-19 infection levels grow, forecasts are being revised lower.”

Market reaction

USD/JPY consolidates the uptick to 106.67, reached after the Japanese GDP contracted by a record in the April-June quarter. Broad dollar weakness keeps the further upside elusive in the spot.

At the press time, USD/JPY trades flat at 106.60.