The BOJ is widely expected to maintain its massive asset buying program and its upbeat forecast that inflation will hit its 2 percent target next year, suggesting no further stimulus is on the horizon. The policy decision is expected around 0230-0330 GMT.
But data released early on Friday showed Japan’s annual core consumer inflation slowed for a second straight month in September, adding to evidence the BOJ is likely to miss its price goal.
Wall Street surged late in the session on Thursday, after data showed surprisingly strong third-quarter U.S. economic growth as the trade gap narrowed. But domestic demand slipped, hinting at some loss of momentum.
The data came a day after the U.S. Federal Reserve surprised markets with an optimistic assessment of the U.S. economy when it announced the end of its monthly bond buying stimulus program.
MSCI’s broadest index of Asia-Pacific shares outside Japan added 0.5 percent, on track for weekly and monthly gains of more than 2 percent, while Japan’s Nikkei stock average rallied 1.7 percent.
Japanese shares also got a lift from news that Japan’s Government Pension Investment Fund is poised to approve on Friday allocation targets which aim to raise the portion of Japanese shares to 25 percent of its portfolio from the current target of 12 percent, two government sources said.
“It’s a surprise. The consensus was that GPIF would go to 20 percent Japanese stocks. The impact of 25 percent will be strong, with a positive impact for stocks,” said Masayuki Doshida, senior market analyst at Rakuten Securities in Tokyo.
But data released before the market showed Japan’s jobless rate rose in September and the availability of jobs fell for the first time in more than three years, suggesting the labor market is starting to lose some momentum. Japanese household spending also fell more than expected in September.
Against the yen, the dollar bought 109.39, up about 0.2 percent on the day and not far from Thursday’s four-week high of 109.47.
The euro edged down about 0.1 percent to $1.2598.
In commodities trading, spot gold edged down about 0.1 percent to $1,196.53 an ounce after plumbing a three-week low of $1,195.70 on Thursday.
Brent crude skidded about 0.3 percent to $85.95 a barrel. Ample supplies and a stronger dollar have pushed prices down more than 9 percent so far in October, and on track for their biggest weekly drop since May 2012.-REUTERS