More BoJ easing likely in near future

There is no fixed time for the BoJ policy announcement tonight. It is typically 12:00 to 13:00 local time (03:00 to 04:00 GMT), though has run on considerably longer on some occasions, particularly if the decision is contentious. Heading into the meeting, opinion on the likely outcome has become increasingly polarized, with a steady drift higher in the number of analysts expecting more policy easing but also a rising proportion expecting no more BoJ easing on any time horizon. 

"As we argue in the current edition of Total FX, we see few technical impediments to the BoJ expanding its QQE program if it is deemed necessary. The outcome is a close call, but we would put the probability of BoJ acting at closer to 60- 70% than the 40% risk the market appears to attach to the decision. We therefore go into the meeting with a bias for USD/JPY trading higher", says RBC Capital Markets. 

Aside from the BoJ meeting, there are a number of key indicators (labour data and various CPI measures), though these will likely stay in the shadow of the policy announcement. The MoF's latest weekly capital flows data showed Japanese investors bought JPY159bn of foreign equities last week, continuing the trend of strong demand for foreign stocks.