(MENAFN - Daily Forex) So far this week, the Japanese yen has advanced 0.64 percent against the US dollar, continuing with a three-week gaining streak.
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The demand for safe-haven currencies has increased lately as coronavirus cases continue increasing in places like Europe and the United States. In Japan, the total number of reported coronavirus cases topped 100,000, as cases continue surging on the island and amid the reopening of the economic activity. More than 1,700 deaths have been linked to the virus. Globally, 44,878,011coronavirus cases have been reported as well as 1,180,914 total deaths.
On Sunday, the Bank of Japan published the corporate Service Price Index, which measures the prices of services that are traded by companies. The index stood at 1.3 percent in September (year-to-year), after climbing by 1.1 percent in the previous month. On Monday, the Cabinet office reported that the Coincident Index stood at 79.2 after being at 78.3 in July. August's Leading Economic Index stood at 88.4 after being at 86.7 in the previous month.
On Wednesday, the Ministry of Economy, Trade, and Industry reported that retail trade dropped by 8.7 percent (year-to-year), after going down by 1.9 percent in August, and worse than what the analysts expected, as they foresaw it to go down by 7.7 percent. Large Retailers' Sales dropped by 13.9 percent in September, after decreasing by 3.2 percent in August.
On Thursday, the Bank of Japan announced its decision to leave the cash rates unchanged, remaining in line with the analysts' expectations. In its report, the bank downgraded its economic growth and inflation forecasts.
The outlook, according to the report, remains uncertain. The GDP is expected to contract by 5.5 percent by the end of the current fiscal year, higher than the previously estimated. Next year, the economy is expected to go up by 3.6 percent, better than previously expected. The bank foresees consumer prices to fall by 0.6 percent, a higher contraction than previously expected, which will probably feed the concerns for too low inflation levels.
"Japan's economy will likely improve as a trend as the impact of the coronavirus pandemic gradually subsides, though the pace of recovery will be moderate," stated the bank in its report.
The Japanese economy could contract by 5.5 percent by the end of the current fiscal year, which is higher than previously expected. Nevertheless, next year's recovery is expected to be more pronounced, as the Gross Domestic Product could increase by 3.6 percent.
The Prime Minister, Yoshihide Suga said that he would push for "budgetary steps" to aid Japan's economic performance. This boosted the expectations for a third budget, which could be announced by next week.
The third budget is very needed, at least according to the surveyed analysts, given the enormous impact of the pandemic on the Japanese economic performance. The Japanese government already pledged to spend around 2.2 trillion dollars on fiscal aid. If approved, an additional $95.51 billion package could be implemented, though the amount is yet to be decided.
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