Another quiet week before the BoJ

This week will likely be another quiet one before the much-awaited 30 October BoJ meeting next week. Hence, USDJPY will likely be driven by overseas development, including the ECB and China data, as well as fluctuations in global risk sentiment. Meanwhile, markets will continue to watch for hints on fundamental development, as well as their implications for BoJ policy, given the downturn in Q3 data. 

Having said that, last week's upside surprise in August composite index of consumption suggests that risk of technical recession appears less likely (although downside risk to capex and inventory remain). This week, the September trade balance and the August Index of All-Industry Activity (both on Wednesday) will shed some more light on the underlying economic trend. 

"We expect the September trade balance (nsa) to turn positive at JPY262bn (consensus: 144bn), the first surplus in six months. On seasonally adjusted basis, we look for a deficit of -64bn (consensus: -50.8bn). We look for the August Index of All-Industry Activity to decline -0.2 % m/m (consensus: -0.3%)", says Barclays.