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BoJ: Focus on the outlook, semi-annual forecast

FXStreet (Bali) - Sean Callow, FX Strategist at Westpac, breaks down the most relevant data for Friday, highlighting the BoJ policy meeting as the main event, in which focus will be on commentary on the outlook plus the semi-annual forecasts.

Key Quotes

Australia’s calendar is low key: Sep private credit (f/c 0.4% m/m) and Q3 PPI (f/c +1% q/q), both at 11:30am Syd/8:30am Sing/HK. We will also see benchmark revisions to GDP, which could produce some changes in the profile of growth but have no policy implications. There should be no AUD impact.

Japan’s data calendar is busy but most attention of course will be on the Bank of Japan meeting. There should be no change in the pace of QE, which translates to around $50bn per month, no small amount. The main focus will be on commentary on the outlook plus the semi-annual forecasts. Both GDP and CPI forecasts are likely to be revised lower, with the 2% inflation goal (ex-consumption tax hike) now unlikely until at least 2016. As always there is no set time for the monetary policy decision but for what it’s worth the same meeting last year concluded at 1:14pm Tokyo/3:14pm Syd/12:14pm Sing/HK.

Taiwan Q3 GDP is due at 8:30am local time, seen at 3.9% y/y. Thailand releases Sep BoP data. China’s official manufacturing PMI for October is due on Saturday. Consensus is 51.2, about stable versus Sep’s 51.1.

In Europe we will see German Sep retail sales (3pm Sing/HK) and most importantly, the advance reading on Eurozone Oct CPI, which will help set the tone for next week’s ECB meeting. Consensus is 0.4% y/y versus Sep’s 0.3% but Westpac sees clear downside risks, especially after Germany printed at -0.3% m/m, 0.8% y/y on Thursday, below consensus. The EZ core inflation rate is seen at 0.8% but this is not the ECB’s target rate.

We also see key inflation data in the US: the Fed’s preferred inflation measure is due. The core PCE deflator is seen staying muted in Sep, at 0.1% m/m, 1.5% y/y. This release comes with the personal income and spending report, seen up 0.3% and 0.1% m/m respectively. The Q3 employment cost index is also due, expected up 0.5% q/q. Canada releases Aug GDP, seen flat m/m, 2.3% y/y.

Japan Jobs/applicants ratio in line with forecasts (1.09) in September

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