Lisa Twaronite's This Week in Japan: Bank of Japan likely to ease further

Alert Email Print By Lisa Twaronite, MarketWatch TOKYO (MarketWatch) — Black and white seems to have been a popular theme in Japan this month, and is likely to color next month's Bank of Japan meeting as well.

Easing, or no easing?

The BOJ's policy board will mull this very black-and-white question at its regular two-day meeting that starts Monday.

The U.S. Federal Reserve could take further quantitative easing-steps to help the slowing U.S. economy, and the resulting lower U.S. yields would mean more downward pressure on the dollar and more upward pressure on the yen at a time when Japan's export-powered recovery is losing traction.

So ahead of the Fed's next policy meeting on Nov. 2-3, the BOJ is probably going to take some steps of its own.

Easing The most likely route for Japan's central bank is expansion of its low-interest-rate-lending facility.At an emergency meeting last month, it increased the program by ? 10 trillion ($ 119.5 billion) to ? 30 trillion, and analysts say the BOJ could expand it by another ? 10 trillion or even ? 20 trillion.

As the need for a weaker yen intensifies, pressure for more Bank of Japan intervention in the currency markets will grow.  

The tankan BOJ's quarterly survey released Wednesday gave credence to those expecting more easing — and also fit the black-and-white color scheme well.

The tankan's key diffusion index for large companies improved for the sixth straight quarter, rising more than expected. Read more on Bank of Japan tankan survey.

But the report also contained some very black clouds: The companies surveyed expect significant deterioration in sentiment in the next survey in December.

Little giant-screen

"Black" and "White" are also the names of the two latest Pokemon games for Nintendo Co. 's (JP: 7974 23,900, + 100.00 + 0.42%)/quotes/comstock/11i! ntdoy (NTDOY 32.80, 3.25,-9.02%)DS game console, which this month became Japan's best-selling DS game ever.

Good for Nintendo?Yes, but not good enough — on Wednesday afternoon, the game-console giant said the launch of its new 3D-capable DS will miss the lucrative holiday season.It also cut its profit and sales outlooks for the fiscal year, citing a stronger-than-expected yen as one reason for doing so.See story on Nintendo's profit outlook

Some 2.5 million copies of the new game titles were sold in the week following their mid-month launch.Customers included my own 8-year-old son, who has barely surfaced for air since our pre-ordered copies arrived.

Yen comfort zone unknown

One of the few gray areas in September has been the foreign-exchange market.