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      From 50.1 to +13 – Assessing Japan's Manufacturing PMI and Tankan Impact on Markets

      EconomicForex
      Summary:

      Japan's Final Manufacturing PMI Prints at 50.1 Amid Fragile Demand; BoJ Tankan Shows Economic Resilience, Keeps 2025 Rate Hike Option Alive.

      Buy USDJPY
      EXP
      Trading

      142.888

      ENTRY

      147.410

      TGT

      141.500

      SL

      143.676 -0.324 -0.23%

      0

      Point

      Flat

      141.500

      SL

      CLOSING

      142.888

      ENTRY

      147.410

      TGT

      Fundamentals

      Japan's final manufacturing PMI for June came in at 50.1, up from May's 49.4. Despite increases in production and employment, underlying demand remains weak.
      Annabel Fiddes of S&P Global notes that companies reported continued declines in domestic and overseas sales, reflecting the ongoing impact of global uncertainties, particularly US tariff policies.
      Despite the weak demand, business confidence has improved, encouraging firms to boost output and hiring. However, Fiddes emphasized that "sustained improvement in consumer demand" is still needed to drive a broader economic recovery.
      Price pressures have also "edged up," with input costs and selling prices both above long-term averages, indicating that inflation risks remain present in the supply chain.
      Moreover, Japan's Q2 Tankan survey revealed that the overall index for large manufacturers stood at +13, exceeding the expected 10 and reaching the highest level since December 2024. Their forward-looking outlook for September was +12, also surpassing the expected 9. The service sector, however, showed a more mixed performance. The large non-manufacturing index remained stable at +34, in line with expectations, but this was a decline from previous readings, with the September outlook dropping to +27.
      Nevertheless, capital expenditure plans surprisingly rose: large firms anticipate an 11.5% increase in capital spending for the 2025/26 fiscal year (expected at 10.0%), while small firms were slightly less pessimistic than expected. Investment data indicates a growing market confidence in the domestic economic recovery.
      Inflation expectations have remained largely stable. Firms expect the CPI to rise by 2.4% over the next year and three years, unchanged from the last survey and slightly lower.
      Despite escalating trade tensions, business confidence has remained robust. Although today's Tankan results are unlikely to trigger an immediate market reaction, they leave room for the BOJ to adjust its rate hike policy by year-end, especially as trade risks stabilize.
       From 50.1 to +13 – Assessing Japan's Manufacturing PMI and Tankan Impact on Markets_1

      Technical Analysis

      The outlook for USDJPY remains unchanged as range trading persists. The intraday trend maintains a neutral stance.
      On the upside, if USDJPY can hold the resistance level at 148.01, it will reignite the rally from 139.87 and break through the 61.8% retracement of the 158.86 to 139.87 decline, which is at 151.22. However, a break above 142.10 would signal further downside movement, with the pair potentially retesting the low at 139.87.
      With the completion of the head-and-shoulders top pattern on the daily chart structure, the market is poised for a significant rebound.

      Trading Recommendations

      Trading Direction: Buy
      Entry Price: 142.76
      Target Price: 147.41
      Stop Loss: 141.50
      Deadline: July 16, 2025, 23:55:00
      Support: 142.78/142.53/142.12
      Resistance: 143.54/144.51/144.96
      Risk Warnings and Investment Disclaimers
      You understand and acknowledge that there is a high degree of risk involved in trading with strategies. Following any strategies or investment methodologies is the potential for loss. The content on the site is being provided by our contributors and analysts for information purposes only. You alone are solely responsible for determining whether any trading assets, or securities, or strategy, or any other product is suitable for you based on your investment objectives and financial situation.

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      Eva Chen

      Analysts

      Master of Economics, 8 years in the financial industry, CFA holder, joined HSBC (Hong Kong) Bank in 2013 after graduating from the University of California, USA in the Investment Research and Markets Department. With years of financial market experience and trading experience, having provided excellent investment advice to many brokerages, entity derivatives importers and clients in Greater China.

      Rank

      2

      Articless

      1737

      Win Rate

      56.68%

      P/L Ratio

      0.65

      Focus on

      XAUUSD, WTI, GBPUSD

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