U.S. Treasury Secretary Scott Bessent called on Japan’s new government to give its central bank room to deal with inflation – a stance that contrasts sharply with his domestic advocacy for the Federal Reserve.
Bessenet posted on social media on Wednesday: “Whether the government is willing to give the Bank of Japan some policy space is crucial for stabilizing inflation expectations and avoiding excessive exchange rate fluctuations.”
The new prime minister, Sanae Takaichi, has long advocated for low interest rates, but has rarely commented directly on the Bank of Japan’s policies recently. Since taking office last week, she has expressed concerns about the impact of inflation and promised to take measures to support families facing rising living costs.
The day before Besant made this statement, the Bank of Japan was about to hold its next meeting, and it was widely expected that the bank would keep the benchmark interest rate unchanged at the meeting. Most economists predict that the Bank of Japan will raise interest rates in January next year.
After Besant’s remarks, the pricing for a rate hike on Thursday rose, with the overnight swap market’s pricing climbing from around 10% the previous day to about 20%.
“I don’t expect a rate hike tomorrow, but given his remarks, I think the possibility of a rate hike in December is higher,” said Yoshimasa Maruyama, chief market economist at SMBC Nikko Securities. “His remarks may reduce the possibility of the Bank of Japan taking action tomorrow, as Kuroda will be seen as the key driver of such a move.”
Goldman Sachs, a globally renowned investment bank, predicts that the USD/JPY exchange rate may fall back to 100 within the next 10 years.
Technical analysis:
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Gold: Yesterday, we observed that the breakout above the blue zone did not occur. Today, we will continue to monitor for a breakout signal and place a buy limit order after a pullback once it happens. Meanwhile, we should also be cautious of a liquidity sweep near 3930 on the downside. For detailed positions, please consult the plugin.
(Gold 15-minute chart)
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The Nasdaq continued to hit new highs as tensions eased around TACO trading and potential progress in Sino-US trade negotiations. We remain vigilant for a rebound signal following the low liquidity sweep; caution is advised when chasing gains, and consider reducing positions if the risk-reward ratio drops below 1:1. For detailed levels, please consult the plugin.
(NASDAQ 15-minute chart)
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Crude oil: After a continuous rebound and recovery for about a week, the oil price trend has entered a sideways consolidation pattern. Operationally, it is necessary to wait for a confirmed breakthrough signal before considering any action. Meanwhile, pay attention to the rebound signal after the low-sweep liquidity. For detailed positions, please consult the plugin.
(Crude Oil 15-Minute Chart)
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Today’s key economic data and events to focus on:
21:45 Bank of Canada interest rate decision until October 29th
22:00 U.S. Pending Home Sales Index for September
