The yen continued to fall on Tuesday after local media reported that Japanese Prime Minister Sanae Takaichi expressed concerns about further interest rate hikes when she met with Bank of Japan Governor Kikuo Iwata last week.
The yen fell as much as 1.1% against the dollar to 156.28, underperforming all other Group of 10 currencies. The Mainichi Shimbun, citing unnamed sources, said Kōichi Hoshi took a tougher stance at the meeting than at the previous one in November. During the London trading session, the yen weakened to around 155.92 against the dollar.
In the evening trading session, government bond futures rose 40 basis points to 133.10, while the Nikkei 225 futures continued to climb in Chicago, surging by as much as 1.7%.
Investors, economists and central bank watchers are trying to assess whether Kishida Fumio has adjusted the Bank of Japan’s stance in response to market concerns over her government’s policy plans, economic development and her historic election victory. The two new candidates for the Bank of Japan’s board of directors that she may nominate on Wednesday will also be closely watched for clues to her policy preferences.
“People had expected Kishida to take a more market-friendly approach, so the report in the Mainichi Shimbun came as a shock,” said Ryutaro Manabe, an FX and interest rate strategist at SMBC Nikko Securities. “This suggests that the risk of the Bank of Japan raising interest rates has increased.”
The Bank of Japan declined to comment on the report by the Mainichi Shimbun. Ueda said after their meeting last week that Kōshi did not make any specific demands and that they merely exchanged some general ideas when discussing economic issues.
Chikako Koike is known for her stance in favor of stimulating the economy and promoting growth rather than raising interest rates. In September 2024, more than a year before she became prime minister, when she was still a member of parliament, she called the idea of raising interest rates “stupid.” Since taking the helm of the Liberal Democratic Party last autumn, her stance has softened, while the Bank of Japan raised interest rates to their highest level in 30 years in December.
After meeting with Ueda last week, when asked about her views on the Bank of Japan, she avoided commenting on the issue of interest rates.
Technical analysis:
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Gold: Yesterday, the low liquidity sweep in the yellow area we alerted occurred as expected, and a rebound followed the sweep. If there is a pullback to around 5150 today, you can try a buy limit operation; or wait for a break above 5200 and then look for a signal of a momentum break. For detailed positions, please consult the plugin.
(Gold 15-minute chart)
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Nasdaq: The price’s decline yesterday did not reach the liquidity sweep position we were aiming for, but it basically refreshed the intraday and daily lows before embarking on a rebound. For today, we continue to watch for a pullback to confirm the demand zone before the rebound momentum resumes. For detailed positions, please consult the plugin.
(NASDAQ 15-minute chart)
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Crude oil: The price has not broken out of the volatile range. We suggest keeping the alert from yesterday for another day. However, today we may add the operation of buying on a pullback after a breakout. For the exact positions, please consult the plugin.
(Crude Oil 15-Minute Chart)
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Today’s key financial data and events to focus on:
18:00 Eurozone January consumer price index final reading
