Japan: Focus on global factors, but also watch for domestic recovery

This week, USDJPY dynamics will likely be dominated by global factors, including the ECB, Yellen testimony, and NFP. Yet, Japan data, October industrial production (Monday), Q3 corporate survey (Tuesday), and October monthly labor survey (Friday), will also provide the latest development on underlying recovery after a technical recession in Q2/Q3. 

October industrial production is expected to accelerate to +2.6% m/m (consensus: +1.8%) from +1.1% in September. Production is likely to increase +2.6% q/q in Q4, which would mark the first expansion in three quarters. In this regard, METI forecast indices for November and December will be another focus. Another focal data point is Q3 corporate survey's capital investment, where it is expected to increase +2.2% y/y (consensus: +2.2%), which suggests a slight downward revision to GDP-based capex in Q3 in the second release on 8 December. 

Moreover, wages per worker is expected to have accelerated to +0.6% y/y (consensus: +0.4%) from +0.4% in September. However, the scheduled pay of full-timers, which most accurately reflects the results of this year's shunto, has been more widespread than the last, but momentum is lacking overall.