RBC on Japan's inflation data due today - and yen positioning

RBC on USD/JPY positioning and the CPI to come later today (2330GMT)

In the week to last Friday, Japanese investors bought foreign bonds to the tune of JPY1.2trn. Having spent the initial six months after US election liquidating foreign bond holdings the trend is now clearly net buying (four week average net purchases JPY500bn), although the size is not large by historical standards and much of the flow is probably FX hedged so has limited impact in FX.

Our JPY positioning indicator shows USD/JPY longs are still very extended, despite the fall in spot through July. A slightly fall in the correlation of FX managers' returns to USD/JPY has been offset by IMM JPY shorts rising to near-record levels

There is a deluge of economic data ...

• CPI inflation (ex-fresh food) is expected to be unchanged at 0.4% y/y
• and the labour market data should show the market continuing to tighten (lower jobless rate and higher offers-applicants ratio), though there is no sign yet of this generating wage inflation.

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Earlier I posted these on the data coming from Japan today:

• Japan inflation data day - 3 banks with 3 different views
• Japan inflation day (is this the day it all turns around for Kuroda? .... LOLz)
• A big day on the economic data calendar in Asia - buckle up!