Third-quarter trends faced more scrutiny, given that policymakers’ concerns about US tariffs impacting the economy despite levies dropping to 15%. In the BoJ’s Summary of Opinions for September, one policymaker referred to the Tankan surveys, stating:
“An examination of the Tankan (Short-Term Economic Survey of Enterprises in Japan) and anecdotal information from firms is required to determine whether firms have maintained their active business stance.”
Another called for a further assessment of upcoming economic data, including the results of the Tankan, before deciding on further policy adjustments.
Meanwhile, the Tankan Large Non-Manufacturing Index remained at 34 in the third quarter, in line with forecasts.
The USD/JPY pair rose from 147.924 to 148.073 after the release of the data, which failed to lift October rate hike bets.
US Labor Market Data and USD/JPY Outlook
Later Wednesday, the ADP’s employment change figures will influence the Fed rate path and US dollar demand. Economists forecast nonfarm payrolls to rise by 50k in September after increasing 54k in August.
A larger-than-expected increase could indicate a resilient labor market and temper expectations of multiple Fed rate cuts in the fourth quarter. A less dovish Fed policy stance may send USD/JPY toward the 149.358 resistance level. A sustained move through 149.358 could bring the August high of 150.917 into play.
Conversely, a lower reading may push the pair toward the 200-day and the 50-day Exponential Moving Averages (EMAs). If breached, 146.5 would be the next key support level.
USD/JPY Scenarios: Hawkish BoJ vs. Dovish Fed Risks
Bearish USD/JPY Scenario: Hawkish BoJ commentary, weak US labor market data, or dovish Fed rhetoric could push USD/JPY toward 146.5.
Bullish USD/JPY Scenario: Dovish BoJ comments, strong US data, or hawkish Fed signals could send the pair toward 150.917.
