Forex News: Yen Falls After Japan Q3 Tankan Survey Data

Yen Falls After Japan Q3 Tankan Survey Data

(RTTNews) - The Japanese yen weakened against other major currencies in the Asian session on Thursday, as Japan business sentiment data rose somewhat but fell short of market expectations.

The Bank of Japan's quarterly Tankan Survey of business sentiment showed that large manufacturing in Japan accelerated in the third quarter of 2026, with a diffusion index score of +24. That missed forecasts for +25 but was still up from +22 in the previous three months. The outlook came in at +21, also missing forecasts for +22 but still up from +17 in the previous quarter.

The large non-manufacturers index came in at +35, missing forecasts for +36 and down from +37 in the three months prior. The outlook was +30, matching expectations and up from +28 in the previous quarter.

The small manufacturing index rose to +14 from +9, while the outlook jumped to +12 from +2. The small non-manufacturing index was steady at +15, while the outlook improved to +10 from +8. Large industry capex is seen higher by 11.3 percent, down from 11.5 percent in Q2. Small industry capex was down 4.7 percent after slumping 8.3 percent in the three months prior.

According to the BoJ's Summary of Opinions from its September policy meeting, some members believe that rate rises should be accelerated or that policy should soon be closer to the target. After the rate rise in September to 1.25%, a 31-year high, the majority of members supported more increases.

Authorities have increased vocal interventions to convey Tokyo's firm will to support the Japanese yen (JPY), so traders are still on high alert. Indeed, Finance Minister Satsuki Katayama and Japan's senior currency ambassador Atsushi Mimura cautioned markets to take coordinated US-Japan message on FX depreciation seriously. Additionally, expectations that the Bank of Japan (BoJ) would increase once more as early as October or December may restrict JPY losses and cap the USD/JPY pair's upside.

In economic news, data from S&P Global showed that the manufacturing sector in Japan continued to expand in September, with a manufacturing PMI score of 54.1. That's down from 54.9 in August.

Asian stock markets traded mixed, as crude oil prices rebounded amid lingering uncertainty about U.S. and Iran reaching a deal to end their prolonged conflict anytime soon and reopen the Strait of Hormuz. Efforts by Qatari mediators to broker a diplomatic breakthrough between the U.S. and Iran have made little progress.

Release of data shows that consumer prices in the U.S. rose less than expected in August, with the data reducing the chances the US Fed will raise interest rates later this month. However, concerns remain that persistent energy-driven inflation could prompt tighter monetary policy.

In the Asian trading today, the yen fell to 3-day lows of 179.26 against the euro and 189.31 against the Swiss franc, from yesterday's closing quotes of 178.47 and 188.55, respectively. If the yen extends its downtrend, it is likely to find support against 180.00 against the euro and 193.00 against the franc.

Against the U.S. dollar and the pound, the yen slid to 6-day lows of 158.35 and 209.84 from Wednesday's closing quotes of 157.57 and 209.00, respectively. The yen may test support around 160.00 against the greenback and 210.00 against the pound.

The yen edged down to 110.04 against the Australian dollar, from yesterday's closing value of 109.43. On the downside, 111.00 is seen as the next support level for the yen.

Against the New Zealand and the Canadian dollars, the yen dropped to a 2-day low of 89.07 and a 3-day low of 111.16 from Wednesday's closing quotes of 88.78 and 110.69, respectively. The next support level for the yen is seen around 90.00 against the kiwi and 113.00 against the loonie.

Looking ahead, Eurozone unemployment rate for August is due to be released at 5:00 am ET.

In the New York session, U.S. weekly jobless claims data, U.S. and Canada S&P Global manufacturing PMI reports for September and U.S. construction spending for August are slated for release.

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