The USD/JPY hit the ceiling near the psychologically significant 97.00 level yesterday before sliding lower. Slight improvements in US employment data allowed the JPY to regain ground against the USD towards the end of the day. Prior to this, the highly-anticipated economic data from Japan, the
Tankan manufacturing report, gave the JPY a slightly weaker tone as it indicated that economic prospects are not as bright.
The Tankan manufacturing index rose from -58 to -48, falling short of forecasts at -43. The non-manufacturing index also failed to meet expectations at -26 as it inched from -31 to -29. Components of the report show that businesses plan to continue cutting down on spending and investment, implying a bleaker outlook for earnings and employment.
No economic reports are due until the end of the week. The JPY could sustain this weak tone for the rest of the day as demand for riskier assets rises ahead of the US
NFP report.