Japan cuts economic assessment first time in four months due to COVID revival

In a monthly assessment approved by the cabinet on Thursday, the Japanese government cut its economic view for the first time in four months. A surge in COVID-19 cases disrupted manufacturers' global supply chains and dampened consumer confidence, the government said in its September report.

Among key economic elements, authorities downgraded their view of production for the first time in 17 months, and private consumption for the first time in four months. The downgrade to the overall economic outlook reflects a slowdown in Japan's economic recovery, rather than a change in direction, the government official said.

Market reaction

The report comes on the back of the overnight dovish remarks by the Bank of Japan Governor Haruhiko Kuroda and kept a lid on any meaningful gains for the safe-haven Japanese yen. Meanwhile, the USD/JPY pair remained on the defensive and was last seen trading around the 109.30-25 region, well within the striking distance of multi-week lows touched on Wednesday.