According to Japan’s top monetary official, the recent movement of the yen has been different from expectations, given the interest rate differential between Japan and the United States.
Deputy Minister for International Affairs of Japan’s Ministry of Finance Atsushi Mimatani said on Wednesday: “We have always emphasized that the movement of the yen against the US dollar or the interest rate differential between US Treasuries and Japanese government bonds should be watched. The movement of the currency pair should be consistent with this interest rate differential. But if you look at the actual movement of the foreign exchange market and the changes in the interest rate differential between US and Japanese government bonds, you will find that there have indeed been some deviations recently.”
Miyamura pointed out that since the summer, due to factors such as trade and geopolitics as well as speculation about Japan’s fiscal spending plans, long positions on the yen have been steadily declining.
In recent weeks, there may have been some expectations or speculations about the upcoming fiscal policies of our country, but of course, this is only part of the story, he said.
Miyazaki emphasized that the authorities have not set a specific numerical threshold to define excessive volatility, but “if we find that such volatility is not necessarily caused by any fundamental factors,” then we would consider it somewhat disorderly or excessive. His remarks are in line with the recent warning issued by Finance Minister Katsunobu Kato about excessive market volatility.
When asked about US Treasury Secretary Scott Bessent’s recent remarks on the Bank of Japan, Mitsuie reaffirmed the convention that monetary policy is controlled by the Bank of Japan. Before the latest decision of the Bank of Japan was announced, Bessent had said that the Japanese government should give the central bank some room for policy adjustment to deal with inflation. Mitsuie said that Bessent also recognized the independence of the Bank of Japan.
Regarding the trade issue, Miura said that the recent agreement reached with the United States might be “the best terms we could realistically achieve.” Miura is an important member of the negotiation team led by Japan’s Minister in charge of Economic Revitalization, Akizuki Ryoichi.
He said that Japan did not have to lower tariffs because doing so would require approval from the Diet. As the Japanese government is a minority government, the Japanese authorities explained to the other side that this was not realistic.
In return for lowering tariffs, Japan has committed to investing up to 550 billion US dollars in key sectors of the US. During Donald Trump’s recent visit to Japan, the two governments released a joint situation statement outlining potential projects under this mechanism in the fields of energy, artificial intelligence and critical minerals. The companies involved in these projects include SoftBank Group and Westinghouse Electric.
Miyamura said that this investment plan would benefit Japanese enterprises.
Technical analysis:
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Gold: Yesterday, the operation of directly breaking through the buy stop in the blue area as prompted by our plugin was perfect. Subsequently, the price’s pullback was temporarily halted within our yellow area. Today, we continue to focus on the support near 3390. If it holds, there should be room for another rebound. Meanwhile, we will continue to set up rebound long positions after the liquidity sweep in the 3950/60 area. For detailed positions, please consult the plugin.
(Gold 15-minute chart)
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The Nasdaq: Yesterday, the Nasdaq failed to reclaim the 25,700 mark we alerted in our plugin, leading to a further pullback. Even after refreshing the liquidity in the yellow zone, it did not regain 25,379. The price is currently in a convergent consolidation within the day. Once a directional breakout occurs, short-term traders can take advantage of the trend. For detailed positions, please consult the plugin.
(NASDAQ 15-minute chart)
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Crude oil: Yesterday, we still provided a buy limit operation in the green zone, which could achieve a profit-to-loss ratio of more than 2 times. Today, we will continue to wait and see if there is still a buy limit opportunity near 59.50. For detailed positions, please consult the plugin.
(Crude Oil 15-Minute Chart)
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