Monday starts with a lack of significant catalysts, and there is strong anticipation of a Bank of Japan (BoJ) meeting tomorrow that will likely result in a policy hold. Today being Friday, it’s a time when weekend adjustments can easily occur. However, in the Tokyo market, the USD/JPY pair briefly reached 148.80, marking the highest level since the start of the year. It’s the highest level since November 28th last year, representing a strong US dollar and weak yen trend. In the morning, Japanese Finance Minister Suzuki was asked about the weak yen, and he stated that it’s difficult to attribute it solely to the New NISA (Nippon Individual Savings Account) and mentioned the increase in overseas asset investment from the perspective of diversified investments. Regarding the USD/JPY pair approaching 150 yen, he stated that they will closely monitor future developments and didn’t express strong caution.
Additionally, the yield on the US 10-year Treasury bond has risen to the 4.17% level at times, holding at higher levels recently. It has significantly increased from around 3.94% last weekend. The Bank of Japan (BoJ) will hold a policy meeting next week, but it is widely expected that the negative interest rate policy will be maintained due to the impact of the Noto Peninsula earthquake. The widening interest rate differential between Japan and the United States is also pushing up the USD/JPY pair.
Given the above conditions, some consider the weekend adjustment as a good opportunity to pick up the USD/JPY pair. However, there is also caution regarding the rapidly rising USD/JPY pair, and it is expected that the upward momentum may slow down at key levels. It is likely that today will see cautious price movements around the 149 yen level.
In terms of economic indicators to be announced in the international markets later, there will be Canadian retail sales data for November, the preliminary reading of the University of Michigan Consumer Sentiment Index for January, US existing home sales for December, and the report on securities investments in the United States for November.
Regarding speeches and events, ECB President Lagarde, Chicago Fed President Goolsbee, San Francisco Fed President Daly, and Fed Vice Chair Brainard are among those scheduled to speak. Starting from tomorrow, US financial officials will enter the blackout period ahead of the FOMC meeting.
Today, there are no major economic indicators to watch, and the focus is primarily on waiting for tomorrow’s Bank of Japan (BoJ) monetary policy meeting. There is a slight expectation that there might be some adjustments in the recent yen selling trend.”