"Domestic demand has strengthened ahead of the sales tax hike, pushing up imports. This is likely to continue until March."
- Takeshi Minami, chief economist at Norinchukin Research Institute
The abnormal rally performed by USD/JPY is running out of steam as the pair stuck around 104.3 and were not moving any higher or lower during the last two days already. However, this week the pair can move higher as on Wednesday is scheduled BoJ's meeting, where Kuroda can provide some dovish comments.
While the world's third largest economy is performing well and the central bank's threshold inflation gauge past halfway to Kuroda's desired 2% target, consumers are getting less confident about future prospects. Hence, the Cabinet Office said a measure of consumer confidence deteriorated last month after surging a month earlier, underscoring concerns that April's sales tax hike will choke the nation's budding economic recovery. The seasonally adjusted index of sentiment among Japanese consumers eased back to 41.3 from 42.5 a month ago and moving further away from the 50 level, which indicates optimists outnumber pessimists. Over the corresponding period three out of four index's components declined, although consumers' assessment of employment conditions climbed 0.1 to 48.2, pointing at some improvements in the labour market.
The data contrasts with Japan's economic revitalization minister Akira Amari comments, who said upward revision of economic outlook positively affected consumers' habits, as they began feeling economic amelioration.
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