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Japan's Economy Contracts More Than Expected


For the most part, USD/JPY operated in positive territory on Tuesday, as the risk environment improved on the back of signs of further policy easing out of China and partial dissipation of Omicron fear.

  • The final reading of Japan's Q3 annualised GDP was revised lower to -3.6% Q/Q from -3.0%, indicating a deeper than expected economic contraction.
  • A former senior BoJ official responsible for pandemic response told BBG that "a partial extension [of emergency Covid-19 aid] is possible," albeit its scope will likely be narrowed.
  • Japan's Eco Watchers Survey takes focus today, while BSI Survey will be published on Thursday.
  • USD/JPY has shed 8 pips so far and last trades at Y113.52, with bears looking for a slide through Nov 30 low of Y112.53 towards Sep 30 high of Y112.08, a recent breakout level. Bulls look to a clearance of Nov 29 high of Y113.96 before taking aim at Nov 24 high of Y115.52.

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