We have seen a minor retreat in Japanese equities, which can mainly be attributed to a minor pullback in USD/JPY. However, the index remains in a strong uptrend and this should continue to see buyers look to take advantage of the dips. USD/JPY remains above ¥107.00 and with the greenback facing a big week, volatility is likely to ramp up particularly following the FOMC meeting.
Thursday will be a huge day for the USD and global markets. The market is expecting a hawkish tone from the Fed and should this come to fruition, then the USD could strengthen further. Should USD/JPY manage to extend its gains, then we could see strength in the Nikkei rebuild. I will continue to eye a move back to 16,000 in the near term. BoJ Governor Haruhiko Kuroda speaks twice this week and you can never rule out some volatility on the back of his speeches.