Japan’s Tankan Survey (October 3) rarely moves the market, and this may be doubly true now as large business sentiment is better than for small businesses.
Corporate profits are the highest in more than 50 years as the foreign earnings translate into more yen. Given the policy divergence, and the intervention to support the yen, Tokyo’s September CPI will be watched as a good indicator of the national figures.
Headline CPI may hold below 3%. The core rate (excludes fresh food) may have edged up from 2.6% in August. This could be the near-term peak, as the supplemental budget will offer new protection from energy and wheat prices and energy prices fall faster than the yen.