[Jason_Lim]

USDJPY traded downwards to a low of 88.83 as long USDJPY trades were unwound on intensifying dollar weakness, and the DXY index reached new lows for the year of 75.60. Japanese wholesale prices fell for a ninth month, recording -7.9% YoY in September, indicating deepening deflationary pressures. The BOJ kept cash rates at 0.10% as widely expected but upgraded their views on the Japanese economy and adding that financial conditions are increasingly showing signs of improves. Vice FinMin Minezaki commented that the government should not intervene in the FX market just because JPY rises, and opined that the current rise in the yen is largely due to dollar weakness rather than yen strength. He did repeat however the usual mantra about undesireable rapid moves, suggesting intervention is still an option. But with this weak dollar trend still intact and with the lower threat of intervention USDJPY is likely to trade lower and we look for it to test the previously well-defended barrier at 88.00.