With downward pressure from energy price declines easing and the yen's recent falls seen pushing up import costs, however, we can expect consumer prices to rebound early next year.
A separate index compiled by the BOJ, which strips out the effect of energy and fresh food costs, showed hit 0.3% in October, slightly up from a three-year low of 0.2% marked in September.
The BOJ has acknowledged that it will take time for to accelerate to its target, modifying its policy framework in September to one better suited to a protracted battle against deflation. It kept policy steady at a subsequent meeting in October despite pushing back the timeframe for hitting its price target.
The AUD jumped on the JPY today as investors piled positions in high-yielding currencies with Aussie bond yields near 11-month highs. The AUD rises are driven by higher prices.
We took profit on our AUD/JPY short-term position and are looking to buy this pair again on dips. Our long-term strategy remains with the target at 86.00.
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