The unfavourable currency exchange rate remains a drag on the Japanese manufacturing and high street retail sectors with this trend intensifying following the “Brexit” vote at the U.K. referendum in June, while the Japanese yen is seen as a safe heaven. Real GDP is now expected to grow only 0.7% in 2016 while external concerns over China’s slowdown remain a key risk. In September, the Bank of Japan announced it would turn its monetary policy emphasis away from quantity of money towards interest rates as new policy instruments. The yield curve steepened accordingly. Core CPI declined to -0.5% in August 2016 due to weak consumer demand and cyclical exogenous factors, including energy prices.
Source : Deutsche Asset & Wealth Management