Asia Today: USDJPY still edging higher with one week to BOJ meet

It was a paint-drying session in Asia with a barren data slate and tight overnight ranges providing little incentive to trade.

We were left to focus on news headlines for any inspiration and it was Japan that grabbed the attention. Japan media has been abuzz of late with reports that the Bank of Japan is being pressured by the government to deliver up to $250 bln (¥20 tln) worth of stimulus measures at next week’s monetary policy meeting. Finance minister Jojima denied that there was any truth in the reports but he reiterated that he expects the BOJ to work closely with the government and take “bold” policy steps. He added that both the central bank and government agree on the importance of ending the deflationary spiral the economy finds itself in. Meanwhile Japan’s new economy minister, Maehara, said he hopes to attend Tuesday’s meeting as well, if his schedule allows.

Extending its recent gains, USDJPY briefly touched the 80 handle for the first time since July 5, partly in response to yesterday’s weak trade data but also as stimulus hopes for next week increased. The pair lacked momentum to push higher however and settled back in a tight 79.80-90 range. We might see further gains as Europe latches on the a UK Telegraph story from AEP suggesting Japan is poised to join in the world’s “currency wars” as it faces a triple crisis of crashing exports, recession and a suffocatingly-strong JPY. You can read the article here.

The third and final US Presidential Debate was held during our time-zone but had nothing for markets to react to. It appeared to be Obama’s best (most aggressive) performance of the three but the electoral vote still looks to be as close as ever. On China, both candidates adopted a non-adversarial approach when it came to world trade, willing to work with China as long as it is on a level playing field.

The EUR had found some early support in yesterday’s European session in the aftermath of Spanish PM Rajoy’s weekend election victory and this mild bid tone was maintained throughout the session. It was static in today’s Asian session. USDCAD touched its highest point since August overnight on reduced expectations of a near-term rate hikes from the Bank of Canada (meeting later today).

Data Highlights

• AU Sep. Conference Board Leading Index out at -0.8% vs. flat prior

Upcoming Economic Calendar Highlights

(All Times GMT)

• JP Small Business Confidence (0500)
• SI CPI (0500)
• UK BBA Loans for House Purchase (0830)
• CA Retail Sales (1230)
• CA Bank of Canada Rate Announcement (1300)
• EU Euro-zone Consumer Confidence (1400)
• US Richmond Fed Manufacturing Index (1400)

For more information on today’s events, please visit the financial calendar