Yen Near 160 Faces Japan GDP and CPI Tests as Canada and UK Inflation Data Fill Currency Week Ahead

Japan's first estimate of third-quarter economic growth, due Sunday evening New York time, opens a week of currency-moving data that also includes inflation reports from Canada, the United Kingdom and Japan, with the yen trading just below the 160-per-dollar level that Tokyo officials have flagged as a concern.

The dollar finished last week with substantial gains, with the dollar index ending Friday around 103, up roughly 1% since Monday, Monex Europe said in its week-ahead report. The firm said the U.S. currency was supported by hawkish remarks from Fed Governor Christopher Waller, a hot October consumer price report and higher oil prices, and that USD/JPY would likely be the key pair for markets in the coming days.

Japan's GDP and CPI bookend the week

Japan's Cabinet Office publishes its first preliminary July-September GDP estimate at 8:50 a.m. Tokyo time on Monday, Nov. 16, which is 6:50 p.m. ET on Sunday, MLQ.ai reported. Second-quarter growth was revised up to 0.4% from the previous quarter, or 1.4% at an annualized rate. The figures arrive about five weeks before the Bank of Japan's Dec. 17-18 policy meeting.

Japan's October consumer price index is due on Friday, Nov. 20, Tokyo time, the last major domestic release before the BOJ decision. Consensus forecasts compiled by Monex call for headline inflation to rise to 2.5% from 2.1%, for inflation excluding fresh food to climb to 2.3% from 2.1%, and for the measure excluding fresh food and energy to ease to 2.3% from 2.4%. The BOJ held its rate at 1.25% in October in an 8-1 vote, and markets price roughly an 85% chance of a quarter-point hike in December, Monex said. Monex said it doubts even a firm CPI reading would do more than briefly lift the yen, and that a soft print could push USD/JPY above 160.

Finance Minister Satsuki Katayama said on Nov. 13 that recent currency moves had been "one-sided and rapid" and that Japan would work closely with the U.S. Treasury and "respond appropriately," Reuters reported via CNA, after the yen fell as low as 160.03 per dollar. Japan spent a record 15.4 trillion yen on intervention over three days between July 30 and Aug. 3.

Canada and the U.K. report inflation

Canada's October CPI is due Monday at 8:30 a.m. ET, the last inflation reading before the Bank of Canada's Dec. 9 decision. Economists expect a 0.3% monthly rise that would lift annual inflation to 3.2% from 3.1%, matching May's two-year high, according to Monex. The central bank raised its policy rate by 25 basis points to 2.50% in October, and money markets assign about a 60% chance of another quarter-point increase in December, Newsquawk said. Monex described the December decision as a coin flip and said core measures, which slipped to 1.9% for the median and 1.8% for the trimmed mean in September, would likely decide it.

In Britain, labor market figures are due Tuesday and October inflation on Wednesday at 7 a.m. London time, or 2 a.m. ET. Consensus forecasts listed by Monex look for annual CPI to hold at 3.5%, with core inflation easing to 2.7% from 2.8% and services inflation steady at 3.7%. The Bank of England's November Monetary Policy Report projected headline inflation of 3.73% for October, Newsquawk said. U.K. retail sales follow on Friday.

Fed minutes and other events

In the United States, retail sales for October are due Tuesday and the Federal Reserve releases minutes of its October meeting on Wednesday at 2 p.m. ET. Elsewhere, the Reserve Bank of Australia publishes minutes of its November meeting, at which it raised rates to 4.85% in a 6-3 vote, on Tuesday, with Australian employment data on Thursday. China's loan prime rates are due Friday, when economists expect the one-year rate to stay at 3.00% and the five-year at 3.50%. South Africa's central bank announces a rate decision on Thursday.