Bank of Japan Governor Haruhiko Kuroda will speak in Osaka at 0530 GMT (1:30 am ET, 1430 in Tokyo). He will also hold a press conference at 03:45 to 04:15 local time (0745-0815 GMT).
Japanese officials are coming under increasing pressure to stimulate growth after the economy contracted at a 7.1% pace in Q2. That was largely because of the consumption tax hike but other indicators are also under pressure. Industrial production was down 0.7% year-over-year in July and August exports were 2.6% lower compared to a year earlier.
Kuroda last spoke on Thursday and said he sees no need to change the monetary policy stance at the moment. He endorsed the current yen level but didn’t try to push it further. He said
- Currency level moves due to various factors
- Desirable that currency reflects economic fundamentals
- Doesn’t see current yen weakness as a minus for economy
- Yen level is reflecting fundamentals
A notable change in today’s speech would be a shift in rhetoric on the yen. Jawboning works best when it has some market momentum to work with and the latest USD/JPY gains to a six-year high could embolden him.
Everyone wants to know what Kuroda has to say
The other area to watch is a willingness to act on monetary policy. On Thursday, Kuroda met with Prime Minister Shinzo Abe and he may have been given marching order to do more.
“Should conditions emerge where the target becomes difficult to meet, we are ready to make without hesitation adjustments to policy, additional easing or whatever,” Mr. Kuroda told reporters after meeting Mr. Abe over lunch at the prime minister’s office.
Later that day he also said the BOJ isn’t cornered. “I don’t believe that there is a limit to additional easing or that there is nothing more we can do,” he said.
Any hint about further action would be monumental and could help send USD/JPY to 120.
