Japanese Yen Jumps on Safe-Haven Demand, Capped by Poor Data

The  Japanese yen is strengthening against a  handful of  currency rivals on  Thursday as  investors pour into safe-haven assets amid the  coronavirus outbreak. Japan, which has experienced an  uptick in  Covid-19 cases, reported disappointing manufacturing and  non-manufacturing data that might force the  country into a  recession. The  big test over the  medium-term is if Tokyo will still be able to  host the  Summer Olympics, an  event that was expected to  stimulate the  world’s third-largest economy.

The  Jibun Bank Services purchasing managers’ index (PMI) plunged to  46.8 in  February, down from 51 in  January. This represents the  steepest fall since April 2014 as  new orders fell to  a  nine-year low and  job creation slumped to  a  three-month low. Business confidence fell to  a  four-year low as  companies are bearish on  the  impact of  the  coronavirus, the  aging population, and  global competition.
The  Jibun Bank Composite PMI also tumbled to  47.0 in  February, down from 50.1 in  the  previous month. This was also the  biggest drop in  six years as  firms were affected by  a  reduction in  tourism.
In  the  week ending February 29, stock investments by  foreigners in  Japan declined $6.98 billion, which is the  third consecutive weekly decline. Bond investments held by  Japanese investors abroad decreased $4.58 billion.
Meanwhile, the  Japanese government is considering a  plethora of  options to  battle the  coronavirus outbreak. Health authorities are thinking about quarantining visitors from China and  South Korea for  two weeks, and  Prime Minister Shinzo Abe has been given the  power to  declare a  state of  emergency. These might be important developments as  experts say the  infection rate is the  â€œtip of  the  iceberg” and  more testing should be done.
The  Bank of  Japan (BoJ) confirmed earlier this week that it is ready to  initiate monetary policy accommodation efforts to  cushion stocks and  ensure the  economy can weather the  storm.
In  recent weeks, there has been a  lot of  speculation about the  Tokyo Games this summer. The  International Olympic Committee (IOC) has confirmed it is sticking with Japan, and  Japanese officials say they might move up the  event for  precautionary reasons. For  now, you can anticipate the  festivities to  happen in  July.
Japan presently has 1,000 cases, including more than 700 from a  cruise ship. The  global death toll has topped 3,500 and  confirmed cases have surpassed 95,000.
The  USD/JPY currency tumbled 0.77% to  106.70, from an  opening of  107.53, at  14:04 GMT on  Thursday. The  EUR/JPY slipped 0.25% to  119.44, from an  opening of  119.74.

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