JPY: BoJ begins meeting
The BoJ begin their two-day board meeting today but we expect little change on their policy outlook though further revisions to the downside are possible. Consumer confidence released on Friday sank to a record low as inflation begins to weigh on the economy. The Cabinet Office's quarterly consumer sentiment index fell to 32.3 on a seasonally adjusted basis, from 36.5 in March, the lowest since 1982 when the survey began. Although headline and core inflation are both picking up, Friday’s data will likely force the BoJ to retain its current bias, where downside growth risks are the overwhelming concern. In other data, May's industrial output was revised a touch lower to 2.8%m/m growth and capacity utilisation index was up 2.2% m/m. Strong capital expenditure will remain supportive for the economy but we continue to doubt the ability of the JPY to extract strength from macro data at present.