BoJ likely to be on hold till April 2016

A relief rally in global equity markets and solid US economic data helped USDJPY regain some of its losses. While yen should remain prone to the fluctuations in global equity markets, a potential Fed hike delay and sidelined BoJ policy stance will likely weigh on the pair. 

"Indeed, BoJ Governor Kuroda said on August 27 that "At this stage, the economy and prices are trending in line with our expectations and we believe the 2% price target can be reached with the current QQE," ie, without additional easing. No further BoJ easing expected until April 2016 and expect fiscal rather than monetary stimulus should Q3 GDP register continued negative growth, which is not our base scenario", says Barclays.
 In terms of economic data this week, Q2 corporate survey and July industrial production will shed more light on Q3 economic activity, and wage data will also be closely watched. The Q2 corporate survey is expected to show Q2 capex including software to have increased 8.8% y/y.

"While July industrial production is expected to have decreased -0.2% m/m, recovery is expected in Q3 as a whole (+1.4% q/q vs -1.4% q/q in Q2). Regarding wages, the July Monthly Labor Survey is expected to show wages per worker increased +0.4% y/y from June (-2.5%), which fell sharply due mainly to front-loaded bonus payments", added Barclays.