The Week In Hindsight, 21 December 2013

The closing hours of the week saw the BOJ opt to hold off on changes to the current monetary policy program. The was, in part, due to the Federal Reserve’s tapering operation driving USD/JPY higher, further boosting growth prospects for Japan into 2014. The NIKKEI also responded to the Fed’s move positively and continues to threaten a new peak for the current year.

Forecast to rise by all major banks throughout 2014, the NIKKEI will be one to watch closely. Key economic barometers of focus will be Average Earnings figures and inflation numbers. In addition to growth figures, the BOJ and monetary policy will remain a focal point of attention for the market in the New Year. Should momentum behind the economy be deemed insufficient ahead of the planned sales tax increase in April, it is likely that the BOJ will ease policy further by increasing asset purchases under the current program.