The US dollar opened this trading week on the positive note. The greenback was extending gains in the Asian trade. The USD/JPY pair reached the psychological level of 111.00. Experts say the strength of the US dollar is capped due to geopolitical risks. Meanwhile, market participants are absorbing the Tankan survey, released by the Bank of Japan. PMI for large non-manufacturing companies edged up to 24 points in the second quarter. However, business confidence index for large manufacturers eased to 21 points, missing the median forecast, down from an increase to 24 in the previous quarter. Analysts say that such tepid figures are caused by trade jitters between the US and its trade partners and lack of workforce in Japan. Traders are a bit discouraged with the statistics from China. The private survey by Caixin and Markit reads the business activity of small and medium sized manufacturing companies ticked down to 51 points in June from 51.1 in May.
Large factories in China revealed a similar dynamic in June. The official Manufacturing PMI dropped to 51.5 last month from 51.9 in May. Business activity in the non-manufacturing sector, on the contrary, rose in June. The local business shifts focus towards the services sector. This policy is logical in the context of the escalating trade conflict between the US and China. Since July 6, the US customs authorities will levy new higher tariffs on China's imports. Today, the economic calendar contains several market moving reports, in particular a Manufacturing PMI from the US Institute of Supply Management.