JPY: Idiosyncratic stock market correction having limited spillover effects - ING

"While USD/JPY did come off its 114.00/50 highs this week - partly as US yields topped out and partly as US stocks corrected - the cross-asset correlations haven't been telling of anything fundamentally untoward," ING analysts point out.

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"Indeed, we saw in February 2018 that a spike in the VIX index had a limited impact overall on USD/JPY - and there's an air of 'deja vu' when it comes to price action this. We suspect short JPY unwinds have probably been the main reason for the 2 big figure move lower in the pair - and in absence of any sustained stock market sell-off next week, USD/JPY could well stabilise in the 112-113 range."

"The Japanese calendar sees Sep national CPI data (Fri) - with markets looking for the core (ex-food) CPI release to marginally tick up to 1.0% YoY. Although with the BoJ's preferred core-core CPI print still expected to stay rooted at 0.4% YoY, we doubt there'll be much of a reaction in JGB yields or the yen. All of this does, however, precede an important BoJ meeting later in the month - so also watch out for activity data in the week ahead (capacity utilization, industrial production, trade). As our economists have noted, the Japanese economy is not in bad shape."