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Japan PMI Falls, But BOJ Meeting Remains Concern

Jason Shemtob

THE TAKEAWAY: Japan’s CPI fell in January as prices and the overall Japanese economy remain stagnate > FX traders should focus on the upcoming BOJ meeting > Yen Outlook Neutral

Japan’s National Consumer Price Index (YoY) for January came in at -0.3%, below expectations of -0.2% growth and below December’s growth of -0.1%. While inflation has been on an uptrend since late 2009, price growth still remains weak, indicative of Japan’s stagnate economy. The Yen did not immediately react to the data release, with the USD/JPY trading at 92.614 as of this report.

In an attempt to jump start economic growth, Japan’s Prime Minister Shinzo Abe’s publicized push for more aggressive monetary policies has sent the Yen on a sharp fall, decreasing by over 16% versus the dollar since late 2012. Most recently, Abe nominated Asian Development Bank President Haruhiko Kuroda as head of the Bank of Japan (BOJ), a move expected to further Abe’s dovish monetary stance. While the BOJ is expected to begin an open-ended asset purchase program starting in 2014, Kuroda’s nomination may pave the way for earlier than expected action. Such moves could send the Yen falling further, while BOJ inactivity may have the opposite effect. FX traders should make sure to pay attention to the next BOJ rate decision meeting on March 7th, which may provide clues as to the near-term monetary policies of the newly staffed BOJ.

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USD/JPY (6 Hour Chart)

Japan_PMI_Falls_But_BOJ_Meeting_Remains_Concern_body_Picture_2.png, Japan PMI Falls, But BOJ Meeting Remains Concern

Created by Jason Shemtob using MarketScope 2.0

USD/JPY (120 Day Chart)

Japan_PMI_Falls_But_BOJ_Meeting_Remains_Concern_body_Picture_1.png, Japan PMI Falls, But BOJ Meeting Remains Concern

Created by Jason Shemtob using MarketScope 2.0

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