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The sentiment amongst the Japanese manufacturing and services firms improved to pre-pandemic levels in the first quarter of 2021, the latest survey conducted by the Bank of Japan (BOJ) showed on Thursday.

Key findings

“The headline index for big manufacturers’ sentiment rose to plus 5 in March from minus 10 in December, the Bank of Japan’s closely-watched “Tankan” survey showed, marking the third straight quarter of improvement and hitting the highest level since September 2019.”

“Big non-manufacturers sentiment improved to minus 1 in the March survey from minus 5 in December, the survey showed.”

“Big firms expect to increase capital expenditure by 3.0% in the year that began in April, compared with a median forecast for a 1.4% increase.”

Market reaction

USD/JPY has pullback from higher levels, now testing daily lows at 110.65, down 0.05% on the day.

The retreat in the US dollar along with the yields weighs down on the major.