Marketmind: The yen also rises

By Jamie McGeever

(Reuters) – A look at the day ahead in Asian markets from Jamie McGeever

The heat is off the Bank of Japan. A little.

The BOJ announces its policy decision on Friday against a much calmer market backdrop than only a few days ago. Economists expect no change to the bank’s ultra-loose stance and an upward revision to the inflation outlook.

Other Japanese data due on Friday include inflation and unemployment, which could also drive trading sentiment in Asia.

The dollar has slumped to a three-week low against the yen and below the level that prompted the BOJ’s historic yen-buying intervention on Sept. 22. Two subsequent bouts of suspected intervention appear to have done the trick, for now at least. (Graphic: Yen and BOJ intervention, (Graphic: Japan 10-year yield & BOJ cap,

Not only has the BOJ been helped by a wider pullback in the dollar, as investors begin to consider a less aggressive Fed beyond next week’s expected 75 bps rate hike, an easing of financial conditions has helped markets more broadly.

The Dow is up five days in a row, its best run since August, the is back below 4% and MSCI Asia ex-Japan is up three days in a row, its best stretch in seven weeks.

Of course, it’s a bit more complicated than that. Meta Platforms Inc’s shares sank 25% after its Q3 results spooked investors, hammering the tech sector. Apple (NASDAQ:) and Amazon (NASDAQ:) are up next with earnings.

There are other reasons to suspect this week’s ‘risk on’ rally could soon fade.

While it may not be directly affecting markets on a day-to-day basis, there is still a war raging on Europe’s doorstep. And after Chinese President Xi Jinping secured his third term as leader at the weekend, cities and districts across China are doubling down on COVID-19 lockdowns.

Three key developments that could provide more direction to markets on Friday:

Bank of Japan policy decision (no change expected)

U.S. PCE inflation (September)

U.S. earnings (Apple, Amazon)

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