USD/JPY is unchanged in Monday trading. In the North American session, the pair is trading at 112.00, down 0.02% on the day. There are no Japanese events on the schedule. In the U.S., the Empire State Manufacturing Index improved to 10.1, beating the estimate of 8.1 points. On Tuesday, Japan releases trade balance.

With the Japanese economy feeling the squeeze of the U.S.-China trade war and the BoJ offering negative interest rates, there isn’t much to attract investors to the yen unless risk appetite drops sharply. Trade talks between China and the U.S. are continuing, but last week a U.S. official said that an agreement could be months away. Still any progress between the sides would be good news for the export-dependent Japanese economy.

The International Monetary Fund downgraded its economic forecasts last week, lowering its estimate of Japanese growth. The January forecast of 1.1% was lowered to 1.0%. The IMF said that the downgrade was due to weaker Japanese exports, a result of the global trade war. The IMF also lowered its forecast for global growth, from 3.5% in January to 3.3%. Earlier in the week, a BoJ forecast downgraded its assessment for three of the country’s nine regions. Nonetheless, BoJ Governor Haruhiko Kuroda remained optimistic, saying that stronger domestic demand will offset the decline in exports, which would enable the economy to grow at a moderate pace.

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