OVERNIGHT

Dollar down, yen up.

If that sounds like a parlor game, it isn't. As noted last week the U.S. dollar fell to a 17 month low against the yen and Japanese stocks took their early Monday cue from the currency markets.

Meanwhile, the WSJ reported: China shares jumped Monday amid expectations that soft inflation leaves room for authorities to stimulate the economy through further monetary easing.

The Shanghai Composite Index was up 1.8% at 3038.78.

But in Japan, where the yen touched a fresh high against the U.S. dollar, the Nikkei Stock Average fell by 1.3%.

Shares in China and Japan have diverged markedly in performance over the past one-month period, as the People’s Bank of China and Bank of Japan face starkly different challenges.

Investors and analysts believe that China’s central bank has ample tools to ease policy, including potentially cutting interest rates, but that Japanese officials are running short of options, after already moving to negative interest rates earlier this year.

Data Monday showed Chinese consumer inflation rising 2.3% in March from a year earlier, the same as February’s tally and remaining below the government’s target ceiling.

Other data released Monday showed Japan's core machinery orders dropped 9.2% in February from the previous month adding to concerns about the lack of recovery in the light of Japanese official attempts to stimulate growth. The prospect of a stronger yen also weighs heavy on Japanese exports.

The next unknown is when or if the BOJ will take any further action to offset the rising yen, unlike in China where investors seem to think officials there have further room to tackle their situation.