Sign Up Log in

    Japanese machinery orders increased by 7.6% year-on-year and 3.0% month-on-month.

    by VT Markets
    /
    Aug 20, 2025
    Japan’s machinery orders saw a 7.6% increase compared to last year, exceeding the expected growth of 5.0%. On a monthly basis, machinery orders climbed by 3.0%, breaking away from the previous forecast that anticipated a 1.0% drop.

    Rising Corporate Confidence

    The surprisingly high machinery orders are a strong indicator of increasing corporate confidence in Japan. This suggests that companies are spending more on capital, which could positively impact the domestic economy. It’s a positive sign for Japanese stocks and may signal a shift for the yen. With this encouraging outlook for corporate investment, we think there’s potential for further growth in the Nikkei 225. Foreign investors have already invested a net ¥2.1 trillion into Japanese stocks in July 2025, and this new data should support that trend. Consider buying near-term call options on the Nikkei 225, which is currently above 42,500, to take advantage of this positive sentiment. The robust economic activity puts more pressure on the Bank of Japan to adjust its policies. This machinery orders report makes it difficult for the BoJ to maintain its current supportive stance. We can expect a more assertive tone from officials in the weeks to come.

    Strengthening Case for a Stronger Yen

    This outlook also supports the idea of a stronger yen, leading to a lower USD/JPY exchange rate. Japan’s core inflation has been above the BoJ’s 2% target for over two years, and this growth data might be key for a significant policy shift away from the enduring strategies of 2024. The suggested approach is to buy USD/JPY put options that expire in September or October 2025. Implied volatility for yen options has been relatively low, making them an affordable option for potential market moves. Speculators have heavily shorted the yen for a while, creating a chance for a short squeeze if there are any hawkish surprises. This data reinforces our belief that the risks lean towards yen strength and further increases in domestic stocks. Create your live VT Markets account and start trading now.

    here to set up a live account on VT Markets now

    In This Article

    see more

    Back To Top
    server
    Click Click Click Click Click
    Follow us on

    Hello there 👋

    How can I help you?

    Chat with our team instantly

    Live Chat

    Start a live conversation through...

    • Telegram
      hold On hold
    • Coming Soon...

    Hello there 👋

    How can I help you?

    telegram

    Scan the QR code with your smartphone to start a chat with us, or click here.

    Don’t have the Telegram App or Desktop installed? Use Web Telegram instead.

    QR code