All Eyes on the Yen Ahead of CPI Data and BoJ Rate Decision

With an endless list of Japanese data due for release over the next few hours, the Japanese Yen will be the story of the night. We are expecting overall household spending, retail sales, Tokyo and national consumer prices, industrial production, PMI, jobless rate, housing starts, construction orders, the Bank of Japan monetary policy decision and the release of their semi-annual economic outlook.

CPI and the economic outlook report will be the most important since inflation or the lack thereof has been one of the primary barriers preventing the Bank of Japan from raising interest rates. A flat CGPI reading and a drop in import prices suggests that CPI could be weak, but upside surprises in the other data could easily erase any Yen bearishness. Either way, expect some decent volatility in the Japanese Yen tonight.