Japan Cabinet Office maintains view economy recovering, flags coronavirus as big risk

Japan’s Cabinet Office is out with its latest monthly economic assessment report for February, which showed that the government maintained its view on the economy.

Key quotes:

The economy was recovering at a moderate pace, while an increased weakness centered on manufacturers remains intact amid continued softness in exports.

The virus outbreak is the biggest risk to the economy. We need to pay a close attention to its adverse impacts to the economy.

Kept its view that factory output remained weak and said it was expected to stay sluggish for a while as the virus drags on China’s economy and disrupts global supply chains.

consumer spending was picking up and capital spending was “increasing moderately but showed some weakness.

Both assessments were unchanged from last month.

Exports were weakening.

FX implications:

The Japanese government’s economic assessment had little to no impact on the local currency, as the yen keeps its bearish momentum intact across the board. The USD/JPY pair is seen tracking the fresh leg up in the US dollar across its main peers, now trading 0.44% higher near a new ten-month high of 111.86.