Japan’s Q3 GDP fell 2.50%, its hardest contraction since June 2014. A sharp drop in October’s current account balance supported the gloomy picture. The Bank of Japan’s Q4 Tankan data confirms that business is heading downward.
Manufacturers’ sentiment was unchanged, following three quarters of declines. Industrials remain largely more upbeat, as the impact of major typhoon Trami and earthquake from September requires the reconstruction of infrastructure in the region. Overall however, trade tensions between the US and China remain, and bilateral discussions with Washington will start as early as January 2019. The Japanese government will aim to safeguard tariffs related to US beef. USD/JPY is currently trading at 113.50, approaching the 113.70 range short-term.
