After the Japanese yen’s exchange rate dropped to its lowest level in nearly 10 months, Junko Nakagawa, a member of the Bank of Japan’s board of directors, pointed out that it is necessary to normalize the exchange rate, hinting that an interest rate hike might occur as early as next month.
“Given that the real interest rate is currently at a very low level, I think the central bank needs to move towards normalizing interest rates,” Kojima said on Thursday in Niigata Prefecture in northern Japan when addressing local business leaders.
Koizumi’s remarks seemed to be an attempt to send a hawkish signal amid the weakening of the yen, but the yen’s exchange rate against the US dollar fell further instead, suggesting that investors might be expecting a more forceful statement.
Koizumi, who joined the board in March, made her first remarks since then, suggesting that the Bank of Japan may raise interest rates when it announces its next policy decision on December 19. Previously, two board members called for a rate hike at the BOJ’s October meeting. Koizumi’s remarks may further strengthen market views on the necessity of a rate hike, indicating that there is a broader call for a rate increase among the nine board members.
Xiao Zhi, a former economics professor, said that recent indicators show that the output gap (the balance between supply and demand in the economy) has remained around 0%, while the labor market is extremely tight and concerns over labor shortages are growing.
She said, “Under such circumstances, I think it is necessary for the central bank to continue raising the policy interest rate and adjust the degree of monetary easing in accordance with the improvement of economic activities and prices.”
Xiao Zhi said, “I think Japan’s recent economic indicators have performed steadily overall.” She also pointed out that prices have risen relatively strongly, and the core inflation rate (which Governor Ueda often mentions as an important indicator for determining when to raise interest rates) is about 2%. This indicates that in her view, the Bank of Japan has basically achieved its goal.
Technical analysis:
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Gold: The break and pullback buy signal we alerted yesterday through the plugin performed exceptionally well, generating a profit-to-loss ratio of over 2 times. For today, we suggest maintaining the observation of the momentum signal around 4080; at the same time, pay attention to the liquidity sweep signal near 4030. For detailed positions, please consult the plugin.
(Gold 15-minute chart)
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Nasdaq: Yesterday, our plugin alerted us to buy at the low when the index broke through 24,730 and then pulled back to the blue zone. The market movement was largely in line with our prediction. Nvidia’s earnings report exceeded expectations. We will continue to adopt the strategy of buying after the liquidity is low. For detailed positions, please consult the plugin.
(NASDAQ 15-minute chart)
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Crude oil: The price rebounded in the green buy limit area overnight, but it did not achieve a reversal effect. For today, we suggest waiting for a while to see the emergence of a new direction. 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:
21:30 US September Non-Farm Payrolls Report
