Investors are on guard against the possibility that the yen could fall below 160 against the US dollar, while Japanese stocks and government bond futures declined ahead of the Bank of Japan’s interest rate decision on Thursday.
The yen fell 0.6% against the dollar to 159.90, hitting its lowest level since July 2024, after Federal Reserve Chair Powell said the Fed would not cut interest rates again until inflation cooled. In addition, oil prices rose after Iran and Israel launched attacks on key energy facilities in the Middle East.
The market widely expects the Bank of Japan to keep its benchmark interest rate unchanged on Thursday. However, traders will closely watch Governor Masaaki Shirakawa’s press conference to look for any clues about the next move. The rise in oil prices and the weakening of the yen have intensified Japan’s stagflation concerns, increasing the possibility of an increase in fiscal spending and complicating the Bank of Japan’s path to interest rate normalization.
Makoto Noji, chief currency and foreign debt strategist at SMBC Nikko Securities, wrote in a report that Japan is facing “a kind of purgatorial dilemma, where increasing fiscal spending to deal with rising oil prices may instead exacerbate the depreciation of the yen.” “At present, the only feasible option seems to be to intervene and buy the yen.”
Japan’s finance minister said that if necessary, the authorities are fully prepared to take action against currency fluctuations at any time. “We are maintaining a high sense of urgency,” Finance Minister Masako Kato said at a press conference after a cabinet meeting on Thursday. “We are always ready to make a comprehensive response and will prioritize the impact of the currency on people’s lives,” she said.
“Such speculators are more likely to act today because the governor of the Bank of Japan is about to hold a press conference, the leaders of Japan and the United States will also hold a meeting, and there is also uncertainty in the situation in the Middle East,” Katayama added.
Technical analysis:
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Gold: Overnight, as Israel continued to eliminate high-ranking Iranian officials, it added new pressure to the geopolitical situation, and Iran immediately retaliated. The gold price dropped all the way to around 4800. Currently, the intraday price rebound has encountered a key resistance at the 4870/90 area. Only when this area is recaptured can a long position signal be considered. For detailed positions, please consult the plugin.
(Gold 15-minute chart)
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The Nasdaq index: The overnight price dropped due to the intensification of tensions in the Middle East and the Federal Reserve meeting. Currently, it has temporarily stabilized above 24,300. It is recommended to only pay attention to whether a new range consolidation can be formed around 24,500 and consider a bullish signal of momentum break when it breaks upward. For detailed positions, please consult the plugin.
(NASDAQ 15-minute chart)
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Crude oil: The price tested the 99 and 100 levels twice overnight and is now starting to fall back. The price has not shown a willingness to stay above the 100 level continuously. For intraday trading, a short-term sell operation can be considered if there is a rebound back to the 100 level, but this is only for short-term trading to prevent any new unexpected developments in the geopolitical conflict. For detailed positions, please consult the plugin.
(Crude Oil 15-Minute Chart)
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Today’s key financial data and events to focus on:
20:00 UK Bank of England Interest Rate Decision to March 19
20:30 US Initial Jobless Claims for the Week Ended March 14 (in 10,000s)
21:15 Eurozone – ECB’s main refinancing rate as of March 19
