Core consumer inflation in Japan showed a slight uptick in the month of January but continues to remain well below the BOJ’s target and is likely to weigh on the economy. Core CPI, excluding fresh food prices, rose 0.8% during January, sightly better than the 0.7% rise seen in the previous month and in line with economists’ expectations.

Weakness in wage growth, reducing corporate profits and a slide in tourism as a result of the coronavirus outbreak have kept inflation weak in Japan. Core core CPI, which excludes volatile food and energy prices, also increased by 0.8% for the month.

In more disappointing news, Japan’s manufacturing activity contracted at the fastest pace in over seven years during the month of February. The Jibun Bank Flash Japan Manufacturing PMI fell to a seasonally adjusted 47.6 for February from January’s final reading of 48.8.

Following the release of this news the Japanese yen is trading bearish against the US dollar on Friday as markets fear the economic impact of the coronavirus on Asian economies and switch their focus towards other safe haven instruments. At the time of writing, USD/JPY is trading at around 1