NIKKEI225: BoJ Set to Leave Rates Unchanged – Reuters Claims
Contrary to talk yesterday, Reuters cites 5 inside sources that say the Bank of Japan is likely to leave rates untouched.
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- People familiar with BoJ policymaking see no hike next weak
- Caution due to risks of FOMC meeting
- Waiting for more data on wage-driven inflation outlook for 2025
The NIKKEI225 is down 0.36% this morning as bets intensify on the possibility of another hike by the BoJ next week.
Reuters’ Claims
Reuters cited five sources familiar with the Bank of Japan as saying they see the central bank leaving rates on hold next week. The policymakers are going to spend more time scrutinizing data.
They see the board being prudent and waiting for more data next year on wage-driven price pressures. Apparently, there is no consensus on a final decision, as some board members believe the central bank has met its target for hikes in 2024.
FOMC & Yen Risk
The devaluation of the yen has been a big concern for BoJ policymakers and the government. A weak FX rate can cause imported inflation due to the rising costs of food and energy. These concerns have led to various comments by government and BoJ officials.
There is the possibility, the sources say, that the FOMC meeting to be held hours before the BoJ, may cause volatility in the USD/JPY rate.
If the Fed cuts rates we see a stronger yen, and one more reason not to hike rates just yet.
NIKKEI225 Day Chart
The day chart above for the NIKKEI225 shows a market in a sideways trend. The range of the trend is tapering, as shown by the slanted black lines. This usually leads to a breakout higher or lower.
The fact that price is above the Ichimoku cloud may lead to the conclusion that the break should happen to the upside.
However, caution is needed as the chances of a breakout, higher or lower, with this pattern are even. To the upside, the main resistance area is at the previous all-time high of 41,109 (black line).
To the downside, the market would find major support on the bottom of the cloud, and further down at 36,675 (green line).
NIKKEI225 Live Chart
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