Archived IMT (2009.06.30)

HOW TO TRADE THE TANKAN: The upcoming quarterly tankan survey on Japanese business sentiment (23:50 GMT 19:50 EST) is expected to show a recovery from the record lows registered in the April survey (Q1). Large manufacturers’ SENTIMENT index seen improving to -43 from -58, large manufacturers OUTLOOK seen at -34 from -51, Large non-manufacturers index seen at -27 from -31. Historically, however, the more INFLUENTIAL component of the tankan survey has consistently proven to be large manufacturers’ plans for capital expenditure (Capex), which last time was slashed by 13.2%--the worst since the survey began in 1975. Thus, the more important components are the forward-looking indicators, such as capex, and diffusion indices. If markets interpret the survey as leaving the worst behind, risk appetite in Asian session could stabilize from the NY session and dollar could weaken, including USDJPY. Yen, however, may weaken against non-USD currencies.