The preliminary Industrial Production of Japan surges heavily past-1.2% forecast and 1.9% prior to print 8.0% mark on MoM. Though, the yearly figures are disappointing when flashing 16.1% contraction against -15.7% expected. Further, Retail Sales dropped 3.3% on MoM and 2.8% on YoY versus 8.0% and 2.4% respective forecasts.

Japan’s factory output rose in July at the fastest pace on record, driven by automobiles and car parts, signaling a gradual recovery from the blow delivered by the coronavirus pandemic.

“The bounce-back in factory output will run its course in August and we expect a pullback in production in October-December,” said Toru Suehiro, senior market economist at Mizuho Securities.

“Factory output will fluctuate from now on to settle in at about 90% of the pre-coronavirus crisis level,” he said.

The Consumer Confidence Index in August 2020 was 29.3, down 0.2 points from the previous month which is higher than the expectation of 28.7. The categories of the Consumer Perception Indices are Overall livelihood: 31.4, Income growth: 32.7,  Employment: 21.2  and Willingness to buy durable goods: 32.0

Adding to it, Housing stats yearly report of Japan is -11.4% better than the previous monthly record of -12.8% and forecast record of -12.0%

Whereas Japan’s ruling Liberal Democratic Party (LDP) announced on Monday, it decided to hold a leadership vote on September 14, Jiji reports.

According to the latest opinion polls, former Defense Minister Shigeru Ishiba leads the race to be the next Prime Minister. Meanwhile, Chief Cabinet Secretary Yoshihide Suga is the second-most favorite in the leadership race.

On Friday, PM Abe crossed wires to announced his resignation citing health issues. However, he will remain as the national leader unless any sure candidate is found. On this issue, the Japan Times recently quoted various economists to say that Japan’s next leader will likely maintain the basic Abenomics framework.

USD/JPY 4 Hour Chart:

Support: 104.71 (S1), 104.08 (S2), 102.96 (S3).

Resistance: 106.46 (R1), 107.57 (R2), 108.20 (R3).

The positive data of Japan in the broad US dollar weakness environment makes the Yen stronger than the dollar. We expect a bearish trend for USD/JPY.