The Financial Markets Research Team at Rabobank comment that the corrective pullback was arguably inevitable after USD/JPY rallied to yet another year-to-date high at 115.59 on the back of the recent announcement of a fresh dose of stimulus from the BoJ.

Key Quotes

“However, buyers stepped in around the 114.00 threshold and kept the short-term upside bias amid speculation that Prime Minister Abe may call an early general election as reported by the Yomiuri newspaper.”

“Domestic data was mixed as Japan’s economy watchers survey fell to 44.0 in October from 47.4, consumer confidence declined for the third consecutive month to 38.9 in October and machine tool orders at 31.2% YoY were down from 34.7% YoY in September.“

“However, Japan posted its widest current account surplus for a year and a half in September as the softer yen boosted returns on overseas investments. While it remains to be seen if recently announced easing measures will provide the Japan’s economy with a boost, the WSJ reported that some policy makers are “not entirely sure” how expanding BoJ’s balance sheet will raise inflation expectations.”