Japan’s finance minister has stepped up warnings over the yen’s depreciation, with the currency falling below 155 yen to the dollar. Meanwhile, reports suggest that the government will unveil an economic stimulus package larger than expected, raising concerns that Prime Minister Sanae Takaichi’s pro-stimulus stance could slow the Bank of Japan’s pace of interest rate hikes.
“I have seen extremely one-sided and rapid fluctuations in the foreign exchange market,” Finance Minister Masahiro Kawai told reporters on Tuesday. “I am deeply concerned about this situation.”
She added that the government is highly vigilant against any excessive volatility or disorderly movement in the foreign exchange market. The yen is currently trading at around 155.20 against the US dollar, having recovered some of its earlier losses.
As Katakura made cautious remarks, the yen fell below the key psychological level of 155 against the US dollar overnight, intensifying market concerns over possible intervention to prevent further weakening. The yen also dropped below 180 against the euro earlier in the day, hitting its lowest level since the euro’s launch in 1999.
The latest round of depreciation partly reflects growing concerns that the size of the economic stimulus package and its accompanying budget that the government is about to introduce may expand, leading to a more cautious stance from the central bank. Katayama said that the package “has expanded in scale so far,” but she also noted that it is not appropriate to disclose more details at this stage.
Local media reported over the weekend that the total amount of the plan might be around 17 trillion yen (109 billion US dollars), with an additional budget of approximately 14 trillion yen.
Katahira also said that given the economy shrank in the July-September period for the first time in six quarters, it is necessary to formulate a sizable stimulus package.
Technical analysis:
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Gold: The operation of scanning for liquidity in the yellow zone that our plugin alerted yesterday has achieved a profit-to-loss ratio close to 2. For today, we will continue to adopt the strategy of combining the blue momentum break and the yellow low liquidity scan. For detailed positions, please consult the plugin.
(Gold 15-minute chart)
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Nasdaq: The blue buy stop alert we sent out yesterday didn’t perform well, not reaching a 1x return. After the liquidity sweep in the yellow zone, there was no rebound either. For today, we’ll keep an eye on the rebound signal after a low sweep near 24,500. For detailed positions, please consult the plugin.
(NASDAQ 15-minute chart)
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Crude oil: The blue buy stop operation we alerted you to yesterday through the plugin was very successful. Currently, the price has dropped back to the starting point of the rise. We suggest waiting for a new momentum to break through and then look for a pullback to buy. For detailed positions, please consult the plugin.
(Crude Oil 15-Minute Chart)
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Key economic data and events to focus on today:
23:00 US November NAHB Housing Market Index
