The Japan Market see the pressure after the release of Japan factory activity data and BOJ Minutes. Japan’s factory activity expanded at the slowest pace in four months in June, which is a sign momentum in the world’s third-largest economy was levelling out before Tokyo is set to host the Olympic Games next month. Activity for the private sector as a whole contracted for a second straight month due to the weaker reading for manufacturing and continued shrinking in the services sector, clouding the outlook for second-quarter economic growth in the country.

The au Jibun Bank Flash Japan Manufacturing Purchasing Managers’ Index (PMI) had a fall to a seasonally adjusted 51.5 in June from a final 53.0 in the previous month, largely due to a sharp decline in output. Output shrank at the quickest rate since last November, the PMI survey showed, underscoring the pressure Japanese firms were facing from restrictions which is put in place in response to the health crisis.

Elsewhere, the Overall orders and export orders expanded, but at a most weaker pace than in the previous month, the survey showed. But manufacturers’ optimism for the year ahead stayed largely intact on hopes that Japan’s delayed vaccine roll-out would lead to an easing of coronavirus restrictions and fuel an economic recovery.

On the other hand Bank of Japan board members agreed that the massive stimulus measures deployed by advanced nations may help quicken the pace of recovery in the Japanese and global economies, minutes of their April policy-setting meeting showed on Wednesday. Japan will keep monetary settings unchanged for the time being, in the hope its ultra-loose policy and coronavirus pandemic-relief programmes will sustain a moderate recovery.

“There is uncertainty over the pace and effect of coronavirus vaccinations, which could heighten downward pressure on economic activity,” board member said in the meeting “But there’s a chance the stimulus measures taken by advanced nations could quicken the pace of recovery in domestic and overseas economies.” At the April meeting, the BOJ kept monetary settings intact and projected that inflation will miss its 2% target well beyond Governorer Haruhiko Kuroda’s current term ending in 2023.

USD/JPY 4 Hour Chart:

Support: 110.31 (S1), 109.97 (S2), 109.73 (S3).

Resistance: 110.89 (R1), 111.13 (R2), 111.47 (R3).

All the above catalyts are putting the yen under pressure. We expect a bullish trend for USD/JPY.