The manufacturing sector in Japan contracted in the month of June, according to manufacturing PMI released by Jibun Bank. This figure touched a three-month low to a seasonally adjusted reading of 49.3 in June, down from 49.8 in May.

The manufacturing PMI came in lower than the preliminary reading of 49.5 and remained below 50, indicating contraction, for the second consecutive month. The export-oriented economy of Japan has suffered in recent times over the escalating trade conflict between US and China, and the manufacturing sector has been one of the most affected.

New export orders also came in at 46.1, the lowest level since January 2019. According to manufacturers, lower sales to Chinese companies has driven new export orders down. Production volumes have also declined for the sixth consecutive month in Japan, marking the longest period of decline in this figure since 2012-13.

On Monday, USD/JPY continues to trade higher at 108.271, after the release of this news and after the sentiment in financial markets improved over possible resolution in trade talks between US and China.