Tokyo traders will be watching a US Federal Reserve meeting and currency movements next week, hoping for news that might boost share prices from their current seven-week lows, brokers said Friday.
Investors are waiting for the US Federal Reserve's policy-making Open-Market Committee meeting on November 2-3 amid expectations it will renew large-scale asset purchases to boost the economy - known as quantitative easing.
"The market attention is glued to what will come out from the FOMC meeting and how currency rates will move," said Kazuhiro Takahashi, equity information chief at Daiwa Securities Capital Markets.
The recent round of dollar selling on the back of the expected monetary easing may come to a halt after the meeting, which could provide support to the Tokyo market, Takahashi said. A strong yen not only makes Japan's growth-driving exports more expensive but also erodes companies' overseas profits when repatriated.
In the week to October 29, the headline Nikkei index of the Tokyo Stock Exchange fell 2.38 percent, or 224.26 points, to 9,202.45, the lowest finish since September 9. The Topix index of all first section shares lost 13.97 points, or 1.69 percent, to 810.91.
The Bank of Japan holds a policy meeting on November 4-5, an event investors believe will position the Japanese central bank to act promptly if the dollar takes a dive after the Fed meeting. The dollar was trading below 81 yen Friday, approaching its post-war low of 79.75 yen touched in 1995.
BNP Paribas Securities chief credit analyst Mana Nakazora said the market would be watching earnings from Promise and other Japanese consumer lenders next week.
"The market will be focused on how earnings from consumer lenders may affect the whole credit market," Nakazora told Dow Jones Newswires.
Caution is expected to grow before US jobs data on November 5, with investors keen for clues on how the world's biggest economy is faring.