Yen stabilizes in Weak Position as BoJ Rate Hike Awaited
| Action Insight Mid-Day Report 1-23-25 |
Yen stabilizes in Weak Position as BoJ Rate Hike Awaited |
While Yen remains the worst performer of the week so far, it has stabilized as the markets await the highly anticipated BoJ rate hike in the upcoming Asian session. Expectations for this rate move were well set by comments from BoJ Governor Kazuo Ueda last week. Risks from US political developments—specifically tariff policies under President Donald Trump—have now been set aside too, clearing the way for BoJ to proceed with its monetary normalization. Policy rate should be raised by 25bps to 0.50%. The question now centers on how BoJ will portray Japan’s economic outlook and its policy path for the year. With signs of resurgent inflationary pressures, it’s unlikely that Ueda will strike a dovish tone. In fact, Japan’s upcoming CPI datad ue tomorrow too—expected to show core inflation rising for a second month to 3% in December—will support that view. Ueda's comments in the post meeting press conference could be cautiously optimic. On the one hand, he would reiterate international uncertainties, and refrain from committing to a specific timeline for policy normalization. But the view towards domestic wage development could be upbeat. Inflation forecasts could also be raised in the new quarterly economic outlook report. Both would be seen as hawkish, albeit mildly. Currently, markets are seeing the chances of another hike in the middle of the year, and probably one more by the year-end to bring interest rate to a more neutral setting at 1.00%.... |
EUR/USD Mid-Day Outlook Daily Pivots: (S1) 1.0368; (P) 1.0401; (R1) 1.0461; More... Intraday bias in EUR/USD remains neutral for the moment. On the upside, firm break of 1.0435 resistance will extend the rebound from 1.0176 to 38.2% retracement of 1.1213 to 1.0176 at 1.0572. Rejection by 1.0435 will keep the correction from 1.0176 relatively short. Firm break of 1.0176 will resume whole fall from 1.1213. | |
| GMT | Ccy | Events | Actual | Forecast | Previous | Revised |
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| 23:50 | JPY | Trade Balance (JPY) Dec | -0.03T | -0.64T | -0.38T | -0.39T | | 13:30 | USD | Initial Jobless Claims (Jan 17) | 223K | 220K | 217K | | 13:30 | CAD | Retail Sales M/M Nov | 0.00% | 0.20% | 0.60% | | 13:30 | CAD | Retail Sales ex Autos M/M Nov | -0.70% | 0.10% | 0.10% | -0.10% | | 15:00 | EUR | Eurozone Consumer Confidence Jan P | -14 | -15 | | 15:30 | USD | Natural Gas Storage | -270B | -258B | | 16:00 | USD | Crude Oil Inventories | -0.1M | -2.0M |
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