After yesterday’s BOJ policy meeting, there was a moment when the yen’s strength eased in the overseas market. However, it couldn’t return to the pre-BOJ announcement levels of yen weakness. Today, Japanese government bond yields are rising again, and yen strength is once again exerting pressure. The Nikkei average is being pushed lower by selling pressure, and the impact of yesterday’s BOJ meeting still lingers. BOJ Governor Ueda mentioned in the press conference that the certainty of achieving the price target is gradually increasing, citing the core-core CPI revision that showed the same number.
Tomorrow, the US will release the preliminary estimate of Q4 GDP. The consensus estimate is a QoQ annualized growth rate of +2.0%, indicating a slowdown from the previous +4.9%. However, the US economy continues to grow positively, and the result is likely to confirm the soft landing scenario after consecutive rate hikes. In addition, the ECB meeting is expected to keep policy rates unchanged. The stance of “data-dependent” is likely to be maintained. Both announcements are expected to be interpreted as yen-weakening factors from the perspective of interest rate differentials, following the BOJ’s announcement of maintaining the status quo, but the market’s reaction remains to be seen.
In the overseas market later today, economic indicators such as preliminary PMI figures for January from France, Germany, the Eurozone, the UK, and the US are expected to be the focus. In Canada, the central bank is announcing its monetary policy, and the consensus in the market is for unchanged policy rates. Governor Macklem of the Bank of Canada is scheduled to hold a press conference.
As expected, the USD buying pressure has shown signs of fatigue, and a corrective mood is setting in. Today, I anticipate a potential shift in favor of the USD following the release of the US Manufacturing PMI. We should keep an eye on developments in the market.
