FX Update: USD/JPY could touch 116.50 this week

USD/JPY downside risk greater than upside risk near-term, pair may head for 116.50 this week. FX players gradually pricing in weak Japan 3Q GDP data, so even if data weaker than consensus (Dow Jones poll tips price-adjusted annualized growth of 1.1%), market impact may be limited.

Even after a weak GDP figure, Fukui may still reiterate the BOJ's assessment that the economy is expanding and the BOJ does not need to change its current stance; that could refuel market expectations of rate hike in December.

U.S. CPI, PPI, housing starts this week unlikely to change view that U.S. economic growth slowing, inflation tame, Its Possible dollar/yen will keep its weak tone this week.