Mixed bag of data leads market groping for direction
Japan’s June Tankan survey turned out strong as we expected. Large manufacturers’ diffusion index improved to 4 from -8 in March, beating expectations of 3. Strong data is seen to be a boost for PM Abe’s economic policies and political standing, likely reinforcing expectations for an LDP win in the Diet Upper House elections next month. USDJPY has now retraced more than half of its May-June decline and we continue to favour rebuilding long exposure.
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BNP Paribas