Strong USD, sticky CPI, Fed hold recipe for BOJ hike
Nov 14 (Reuters) -Recent U.S. dollar strength and higher U.S. interest rates combined with indications of sticky Japanese inflation and stronger economic data from October seem to practicallyensure another Bank of Japan rate hike in December despite views suggesting otherwise nL4N3LF09I.
The Trump trade hasreturned with a vengeance following the red sweep in the Nov5 U.S. elections.Higher Treasuryyields tied to higher U.S. deficits and likely higher inflation on expected Trump policies sent USD/JPY from a 151.30 low on Nov 6 to 155.94EBS Thursday.
The domestic inflation implicationsof renewed yen weakness haverecently been highlighted in BOJ Policy Board deliberations, and will undoubtedly bea major factor in a likelydecision to hike at the Dec 18-19 meeting.
Although inflation may have slowed a bit into the fall with Tokyo core consumer pricesback down near the BOJ's 2% target and overall JapaneseCPI a bit lower in September, there are indications of renewed inflation pressures as evidenced in the corporate goods price index out Wednesday nL1N3MK025.
And other economic indicators may also suggestfresh growth from October following confirmation of a weak third quarter in GDPdata due Friday (the poll forecast is for 0.7% annualised growth from 2.9% in Q2). nL4N3M70QL
Shifting U.S. Federal Reserve expectations may also provide a fresh reason for the BOJ to hikein December. A Trump presidency and associated policies could well force the Fed to pause in cutting rates further nL1N3MD1WT, nL1N3MJ0ZC, nL1N3MK1AN. Recent comments from Fed officials suggest a possibly more circumspect view taking hold nL1N3MK0SH, nL1N3MK0KL.
For more click on FXBUZ
BOJ keeps rates steady: https://reut.rs/3YKqnyA
USD/JPY: https://tmsnrt.rs/4fhw10Z
Haruya Ida is a Reuters market analyst. The views expressed are his own. Editing by Sonali Desai
Related Assets
Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.
