Dollar Gains Against Yen After Tankan Survey Gives Upbeat Reading

Dollar Gains Against Yen After Tankan Survey Gives Upbeat Reading
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(December 14, 2017) The dollar eased against the yen in Asia on Friday as a key survey on Japan’s economy showed continued momentum.

USD/JPY changed hands at 112.32, down 0.06%, while AUD/USD was nearly flat at 0.7668.

Japan’s big manufacturers’ business confidence improved in December from three months ago, the Bank of Japan’s closely watched quarterly “tankan” survey showed on Friday, in a sign the economy is gathering momentum. The headline index for big manufacturers’ sentiment stood at plus 25 in December, and is expected to fall to plus 19 over the next three months, the tankan showed. The reading compared with plus 22 seen in the previous survey in September, outpaced the median market forecast of plus 24, and was the highest since December 2006, when it reached the same level.

The U.S dollar index, which measures the greenback against a basket of six major currencies, was last quoted up 0.26% to 93.64.

Overnight, the U.S. dollar rallied on Thursday as economic data from the U.S. shown signs of an expanding economy.

U.S. retail sales surged more than expected in November while jobless claims fell unexpectedly, pointing to sustained growth and a strengthening economy. Meanwhile the Federal Reserve increased interest rates on December, as expected.

The dollar was also bolstered by news that the tax bill could be voted on as early as next week. The GOP agreed to a tax-reform bill on Wednesday with a corporate tax rate would be decreased to 21%, higher than the original 20% proposed and would be implemented in 2018. Investors believe the tax cuts would help companies invest more and boost the economy.

Meanwhile the euro pulled back from gains against the dollar, after the European Central Bank kept monetary policy on hold and revised up its forecast for growth and inflation, but added that underlying inflation remains subdued.

Sterling pared back losses after the Bank of England left bank rates on hold, just one month after raising the interest rate in more than a decade.

The pound was also held up by comments from the BOE that there had been some progress in Brexit negotiations between the UK and Brussels, reducing the risk of a disorderly exit.

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