Courtesy of our friends at Livesquawk here's HSBC's latest client note and adding to the BOJ easing debate

  • BOJ will resist easing in near-term despite weaknesses
  • Japan's economy is showing enough positives to allow BoJ to say virtuous cycle from income to spending is intact.
  • Non-manufacturing sector holding up, with companies positive on capex and indicators pointing to record tight job markets.
  • Much weakness in growth stems from external headwinds.
  • Base wages and ex-fresh food and energy core CPI improving.
  • Gov't sensitivity to household complaints about rising prices means less pressure to ramp up QE and hit 2% inflation target early as possible.
  • BOJ seen downgrading 2015/16 GDP and CPI forecasts at end of month; Kuroda to blame external factors.Risk to call if continued softening of corporate inflation expectations in Tankan survey

Meanwhile USDJPY continues to camp above 120.00 but with rallies tempered by yen-pair selling

EURJPY now on session lows of 134.65