9 Apr 2014
Will sales drop in Japan force early BoJ action?
FXStreet (Bali) - In a headline carried by Bloomberg, Takashimaya department stores (one of the largest in Japan) report 25% sales drop in the first week after sales tax hike, stats that will most certainly be taken well into consideration by JPY traders.
Yesterday's press conference by BoJ Kuroda was perceived as less dovish-than-expected, sounding upbeat about both the economy and the fading negative effects of the sales tax hike, while also saying that new easing measures are not needed for now as the economy recovers.
The comments by Kuroda led market participants to price out immediate easing, an outcome that is not expected until July the earliest now, according to Nomura.
What could possibly make the Japanese central bank change their minds on the need to introduce early additional stimulus?
Any evidence of a major setback in sales volume would probably be a cause of concern for BoJ members, which would make the prospects of further easing more likely. On the contrary, news that Japan is coping with the sales drop rate, would be an indication that the BoJ will hold the fire for longer.
Nikkei notes: "Takashimaya says it carefully assessed the tax hike’s likely impact and is moving to slash costs by around 10 billion yen. Estimates that the combined impact of the drop-off in demand and the tax increase itself will lower fiscal 2014 operating revenue — equivalent to sales — by about 20 billion yen and operating profit by about 5 billion yen."
"Takashimaya is planning sizeable cost cuts, targeting rents as one area for savings. Will also cut back on other costs, including personnel expenditures and advertising fees. Its aiming to save about 7.3 billion yen at its department stores and around 2 billion yen for its group companies", Nikkei added.
Yesterday's press conference by BoJ Kuroda was perceived as less dovish-than-expected, sounding upbeat about both the economy and the fading negative effects of the sales tax hike, while also saying that new easing measures are not needed for now as the economy recovers.
The comments by Kuroda led market participants to price out immediate easing, an outcome that is not expected until July the earliest now, according to Nomura.
What could possibly make the Japanese central bank change their minds on the need to introduce early additional stimulus?
Any evidence of a major setback in sales volume would probably be a cause of concern for BoJ members, which would make the prospects of further easing more likely. On the contrary, news that Japan is coping with the sales drop rate, would be an indication that the BoJ will hold the fire for longer.
Nikkei notes: "Takashimaya says it carefully assessed the tax hike’s likely impact and is moving to slash costs by around 10 billion yen. Estimates that the combined impact of the drop-off in demand and the tax increase itself will lower fiscal 2014 operating revenue — equivalent to sales — by about 20 billion yen and operating profit by about 5 billion yen."
"Takashimaya is planning sizeable cost cuts, targeting rents as one area for savings. Will also cut back on other costs, including personnel expenditures and advertising fees. Its aiming to save about 7.3 billion yen at its department stores and around 2 billion yen for its group companies", Nikkei added.