The all-important Japanese Tankan Manufacturing Index came in line with expectations and rose to 6 points. Despite this rise, USD/JPY continues its steady advance following the release and is testing highs above the 83.40 resistance line.
Early expectations were based on the fact that the majority of the 1200 manufacturers surveyed for this release, handed in their numbers by the first deadline of March 11th.
This was the date of the catastrophic earthquake, tsunami and ongoing nuclear crisis that devastated Japan. So, before the impact of the disaster, the economy was stable, with slightly improving conditions.
USD/JPY now trades at 8.343, moving above the tough 83.40 level that held it before the release. The break still needs to be confirmed.
The main lines to watch with this pair apart from 83.40 are 82.87 and 82 below, and 84 and 84.50 above. For more technical levels, explanations and events, see the USD/JPY Forecast.
The BOJ’s Tankan Manufacturing Index is one of the relatively few Japanese economic indices that have a big impact on the yen.
The BOJ also provided its report for the non-manufacturing, services sector. Also here, expectations stood on a small tick up from 1 to 2 points, and here the figure even exceeded expectations with a rise to 3 points.
The horrific tragedy first sent USD/JPY down, on speculations that Japanese companies would need to “repatriate” money to Japan in order to pay insurance and rebuild the economy. It fell below the previous historic low of 79.75 in a sharp move. This was followed by a coordinated international intervention to weaken the yen in the aftermath of the disaster, in order to aid the economy.
This intervention stabilized the pair around 81 for some time, and in the past week, the pair was on the rise. The big move was when it crossed the 82 area. It then stopped under the 83.40 line just before the release.