A quarterly business survey conducted by the Bank of Japan, measuring sentiment among large manufacturers and other businesses. The Tankan is the most important economic indicator for the Japanese yen.
What the Tankan Measures
The Tankan (Short-Term Economic Survey of Enterprises in Japan) surveys approximately 10,000 Japanese companies about their business conditions, investment plans, employment outlook, and price expectations. The headline figure is the Large Manufacturers' Diffusion Index, calculated as the percentage of firms reporting favorable conditions minus those reporting unfavorable conditions.
Tankan and the Yen
As the Bank of Japan's own survey, the Tankan directly influences BOJ monetary policy decisions. Strong Tankan readings suggest economic resilience that could support rate normalization, potentially strengthening the Japanese Yen (JPY). Weak readings reinforce the case for continued accommodative policy.
The survey is released quarterly (April, July, October, December), making each release a significant event. The December release, which includes annual forecasts, is particularly closely watched.
Trading the Tankan
Tankan releases can produce substantial moves in Japanese Yen (JPY) pairs. The Large Manufacturers' index above zero indicates more companies see conditions as favorable than unfavorable. Traders compare the actual reading against the BOJ's own forecasts for maximum analytical value.
Related Terms
Bank of Japan
The central bank of Japan, responsible for monetary policy and managing the Japanese yen (JPY), historically known for ultra-loose monetary policy and yield curve control.
Japanese Yen (JPY)
The official currency of Japan and the third most traded currency in forex. The yen is a major safe-haven currency that tends to strengthen during periods of global market stress and risk aversion.
Economic Calendar
A schedule of upcoming economic data releases, central bank meetings, and political events that may affect financial markets. Economic calendars are essential planning tools for forex traders.
Purchasing Managers' Index (PMI)
A survey-based indicator measuring the prevailing direction of economic trends in manufacturing and services. PMI readings above 50 indicate expansion, while readings below 50 signal contraction.
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