Friday’s Asian economic calendar is packed with top-tier releases, including: Tokyo inflation, Japanese unemployment and industrial production, South Korean industrial output and retail sales, and trade and current account figures from Thailand.
Top among them is probably Tokyo inflation, which will give an insight into wider price pressures in Japan and what the Bank of Japan might do at its July 30 to 31 policy meeting.
Pressure is mounting on the BOJ to raise rates again or taper its bond purchases, if for no other reason than to cool some of the selling pressure on the yen and lift the currency from the 38-year low it hit against the dollar this week.
Policymakers have warned that tightening policy too much could harm consumer spending and economic growth. But they also continue to express their displeasure with the yen’s relentless depreciation.
They can’t have it both ways.
Japanese authorities have not yet intervened to support the yen this time around, but traders will be on high alert for action, especially in the least liquid parts of the global trading day.
Economists polled by Reuters reckon core Tokyo inflation edged up to 2.0% in June from 1.9% in May. Officials would probably be comfortable with that, but so might yen bears, and renewed selling is bound to sound the intervention alarm.
