The BOJ will be happy with yen weakness
There isn't a lot going on in the market today aside from the weakness in the yen.
The latest leg higher in USD/JPY came after better US August trade data and a revision higher to US second quarter GDP. That moved the pair up a quarter-cent to 101.75 and a fresh session high.
Offers are touted at 101.80 and 102.00 and that could cap the upside in the hours ahead and there are some options running off at 102.00.
In general, the yen is weakening after the round of positive risk appetite set off yesterday on the heels of the OPEC agreement. I don't think that sentiment will last.
Sure, higher oil is good for oil producers and there are parts of the global economy that will struggle a bit less but higher gasoline prices aren't good for the world. Even if a rise at the pumps helps central banks meet short-term inflation goals, it won't change the longer-term picture. If anything, it's negative.
A more-convincing driver is the weak Japanese retail sales report. August sales were down 2.1% compared to -1.7% expected and that's another reason for the BOJ to take more action.
There is already talk about the BOJ cutting rates on November 1.
