Japanese Government plans USD186.60 billion stimulus package on deflated economy and effects of Brexit: July 2, 2016

Intra-Day Market Moving News and Views
21 Jul 2016   01:03GMT

USD/JPY - Dlr rose after New York close earlier today to a 6-week high of 107.45. Traders cited an early report by Kyodo was the driver behind such move.
It was reported this morning that the Japanese government is planning to compile a stimulus package of at least 20 trillion yen ($186.60 billion) to help the economy emerge from deflation and fend off possible adverse effects of Brexit.

This stimulus package is likely to be double the 10 trillion-plus yen that was previously expected, as it will now include projects for fiscal 2017 and beyond and increase "zaito" low-interest government loans by 6 trillion yen, Kyodo reported, citing the sources.
And it is also possible that the stimulus package and public expenditure may increase even further, depending on agreements between the government and the ruling coalition of the Liberal Democratic Party and Komeito Party, source from the news agency.

Prime Minister Shinzo Abe's government will seek Cabinet approval for the stimulus measures in early August, Kyodo reported. The service-sector index fell to 15 from 17 in June, and was seen unchanged in October, reflecting weak domestic demand.
Bleak business sentiment should add to calls for policymakers to do more to revive a flagging economy, with the government eyeing a stimulus package of 10 trillion yen ($94.62 billion) or more and the Bank of Japan under pressure to ease policy further.

Reuters reported ahead of Asian open today confidence at Japanese manufacturers held steady in July but was expected to worsen to zero in the next three months, a Reuters poll found, as Britain's vote to exit the European Union further clouded the outlook for Japan's export-reliant economy.

Tankan, which tracks the Bank of Japan's quarterly tankan survey, also found the service sector's mood fell in July to levels last seen in April 2013 when the BOJ embarked on massive monetary stimulus to reflate the economy.
The monthly poll of 534 big and mid-sized firms taken July 1-15, of which 266 responded, offered an early glimpse of Japanese business sentiment in the wake of the Brexit vote, which briefly prompted a sharp yen gain to below 100 yen versus the dollar.

Tankan sentiment index for manufacturers was unchanged at 3 in July and was seen worsening to zero in October, dragged down by exporters of cars, electronics, steel and chemicals.
The sentiment indexes subtract the percentage of companies saying conditions are poor from those saying conditions are good. A positive number means optimists outnumber pessimists.