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A survey by a Japanese private think tank, Teikoku Data Bank, showed on Wednesday, over 60% of Japanese firms said their earnings are likely to be hit by the coronavirus outbreak.

Key findings

“A separate index measuring companies’ sentiment on the economy hit a seven-year low in February.

The impact of the virus is spreading to various industries.

The economy will likely continue to retreat moderately due to many risks including the epidemic.

 In the survey conducted Feb. 14-29, 63.4% of firms said their earnings were being hurt by the outbreak.

Among those firms, 30.2% said their earnings had already been hit, while 33.2% said they expected earnings to be affected in the near future.”

BOJ to act and how?

With the emergency Fed cut seen as ineffective, the pressure has increased on the Bank of Japan (BOJ) to act by expanding its QE program, as recession risks intensify due to the virus crisis.

USD/JPY is off the highs and falls back below 107.50 amid a resumption of the sell-off in the US Treasury yields across the curve.