Weak Inflation and Data to Pressure BOJ

Japan’s core inflation probably slipped for a second month in September, while factory output fell for a third month in a row, a Reuters poll showed, adding to headaches facing Bank of Japan policymakers as they head into a key policy meeting on Friday.

Private spending data also due next week is expected to show modest improvement, helped by holiday spending, but the rate of recovery likely remained moderate due to slow growth in wages.

The economic data next week will be among the last clues for investors and the BOJ on how the economy performed in July-September after it contracted in the second quarter.

Some economists believe activity shrank further over the summer, sending the economy back into recession and adding pressure on policymakers to offer fresh stimulus.

The core consumer price index (CPI), which includes oil products but excludes volatile fresh food prices, is expected to have slipped 0.2 percent in September from year earlier, a poll of 22 analysts showed.

That would mark a second straight monthly fall after a 0.1 percent dip in August.

Industrial production likely declined 0.5 percent in September from the previous month, which would be a third straight monthly fall following a revised 1.2 percent drop in August and a 0.8 percent fall in July.

“Japan’s exports are weak not only to Asian nations but globally. Along with that, factory output also deteriorated,” said Taro Saito, director for economic research at NLI Research Institute.

via Reuters

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza