Japanese Yen Mixed After Manufacturing Slips into Decline

The Japanese yen was mixed today after data showed that Japan’s manufacturing industry slipped into recession last month. Monday’s trading session had no clear trend, except for the fact that European majors were extremely weak, following the Swiss franc in decline.
The headline au Jibun Bank Japan Manufacturing Purchasing Managers’ Index fell from the neutral reading of 50.0 in December to 49.8 in January according to the final estimate. The reading was in line with market expectations and the preliminary report. A reading below 50.0 indicates contraction. Usamah Bhatti, an economist at IHS Markit, noted that the January decline means that “the sector has not registered growth since April 2019”. The report commented on the result:

Survey respondents registered a fall in output in the latest survey period, following a broad stabilisation seen in December, as rising coronavirus disease 2019 (COVID-19) cases had a renewed impact on the economy. That said, Japanese manufacturers reported a stable trend in new business inflows for the first time in over two years, as some businesses anticipated a recovery in demand in 2021. As a result, firms in the Japanese manufacturing sector remained optimistic of a rise in output over the coming year.

There are several more macroeconomic reports scheduled for release in Japan for the rest of the week. Yet the yen will most likely be reacting more to the outside factors, including the general market sentiment.
USD/JPY rallied from 104.77 to 104.93 as of 19:19 GMT today. At the same time, EUR/JPY dropped from 127.08 to 126.69 and CHF/JPY crashed from 117.55 to 117.04.
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Original from: www.earnforex.com