No easing likely from BoJ until April 2016

The recent downturn in Japan's  growth, along with decelerating inflation and a drop in oil prices, bears a striking resemblance to last fall when the BoJ surprised the markets with additional easing and has led to some market expectations for further BoJ actions in October.

"Given rising global uncertainties and delayed Fed tightening, end-2015 USD/JPY is forecasted to 123 from 127 and the pair is expected to be range-bound thereafter. No further BoJ easing is expected until next April given their constructive outlook on growth and inflation, as well as reduced appetite for yen weakness. The upside surprise of core CPI in August also supports this view", says Barclays.

In this regards, BoJ Tankan survey will be the key focus this week. A decline in Q3 business conditions for both large manufacturers and large non-manufacturers, given concerns about the Chinese economy and resultant global market volatility. 

The inflation outlook of enterprises will also be relevant for assessing the monetary policy stance, as the outlook for general prices by all companies remained unchanged at +1.4% in June. Under-performance in corporate sentiments or their inflation outlook may fuel expectations for early monetary easing, putting downward pressure on the yen. 

"August industrial production is expected to increase +1.1% m/m after two months of decline, and August real household consumption is expected to have risen +0.5% y/y. Another focus is FY15 capex plans, where the large companies as a whole are expected to increase capex by 8.6%, down from 9.3%", added Barclays.