The Bank of Japan (BoJ) will release Q2 Tankan Survey results on 1 July and inflation survey results on 2 July. Standard Charterd estimates, the diffusion index and the outlook for large manufacturers is expected to have improved to 13 and 14 from 12 and 10 in Q1, respectively. Still-low energy prices and improving operational profits likely boosted large corporates' sentiment.
A recovery in non-manufacturing sectors is expected due to booming tourism sector, which bodes well for the local services sector, according to Standard Chartered. The inflation survey tracks corporates' inflation expectations, which are important for the BoJ to adjust its monetary policy. The Bank expects inflation expectations to weaken in the coming months on a waning sales-tax effect.
