Japan downgrades economic assessment for March, worst view in seven years

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

Key findings

Sees economy in a 'severe situation, extremely depressed by the coronavirus'.

First time removing the word 'recovering' since July 2013.

Conditions likely to remain severe due to the influence of the disease.

Economy is worsening at a pace comparable to when the 2011 earthquake struck.

And towards levels last seen during the collapse of Lehman Brothers in 2008.

The damage is as bad as those two events put together.

USD/JPY extends the drop amid risk-off

With the Japanese government reporting the economic conditions as severe due to the coronavirus outbreak, the risk-off sentiment intensifies, boosting the safe-haven demand for the yen.

Further, the relentless selling seen in the US dollar vs. its main competitors also collaborates with the latest leg lower in USD/JPY.

The spot is back under the 110 handle, now printing fresh daily low of 109.88, shedding nearly 1.20% so far.