JPY: Inflation back in focus

Bank of Japan (BoJ) upgraded its economic assessment in May 22 meeting due to improvement in consumption and housing investment. This follows its movement of the forecast period for achieving 2% price stability target from "in or around FY2015" to "around H1 FY2016." 

Barclays notes:

• We have now delayed our BoJ additional easing call from July 2015 to April 2016, given our view that 2% inflation is still unlikely achieved by the BoJ's new time frame. Given that, the outlook for monetary policy and JPY will continue to depend on inflation dynamics.
• We expect April Nationwide Core CPI (Friday) at +0.3% y/y (consensus: +0.6%). On ex-VAT basis, we look for Core CPI to decelerate to 0.0% from +0.2% in March. 
  
  
• We forecast April Services PPI (Tuesday) to rise +0.6% y/y (consensus: +0.6%). Elsewhere, we expect April Industrial Production (Friday) to increase +0.5% m/m (consensus: +0.9%) from -0.8% in March, April Trade Balance (Monday) to turn to a deficit of JPY117.5bn (consensus: JPY362.2bn deficit), April Unemployment Rate (Friday) to remain flat at 3.4% (consensus: 3.4%).