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The Yen Is Falling Again, And All Eyes Are On January 22

Joe WeisenthalJan 7, 2013, 04:16 IST

The yen is weakening again, as the dollar rises to 88.31 against it.

Meanwhile, everyone is waiting for January 22.

Adam Crisafulli & Co. from JPMorgan explain:

Japan – Jan 22 is coming up quickly – the Nikkei only traded one day this week but it managed to make up for lost time (the NKY surged 2.82% Fri). Nothing incremental really occurred in Japan but the same macro narrative continues to propel stocks higher (new PM, new and more aggressive BOJ, etc) although US investors need to be careful to adjust the Nikkei headline % change for FX (i.e. the slumping yen is helping to account for a lot of the Nikkei outperformance). Note that a big catalyst is coming up for Japan in the Jan 22 BOJ decision where a new inflation target (probably ~2%) is expected to be adopted.

The pressure to have the Bank of Japan adopt a more aggressive inflation stance is the big economic story in Japan, and one of the biggest in the world.

That first comes to a head in just a couple weeks.