Release Explanation: This report is a level of a diffusion index based on surveys done by large manufactures in Japan. This is a quarterly release and is also considered a leading indicator of economic health since businesses tend to react quickly to changing market conditions. A change in their sentiment can be used as an early signal of future economic activity such as hiring, investments, or spending.

Trade Desk Thoughts: The confidence seen in the Japanese manufacturing sector has fallen by the most in at least five years as the global recession produces record declines in factory outputs and exports. The sentiment seen among manufacturers was a -66.0 which is much worse than the expected -47.3 as well as below the previous number of -44.5. Japan is heading towards its worst recession since 1945 which is forcing businesses to cut spending and reduce workforces.

Forex Technical Reaction: The Japanese yen bounced off of the neutral pivot point in earlier trade today and is approaching highs from Friday near 96.25.