PU Prime App
Exclusive deals on mobile
On Wednesday, the Bank of Japan released a summary of opinions from its December meeting. The meeting, originally held on 20 December, saw the BoJ increase its 10-year benchmark yield ceiling in a surprise move that boosted the yen over 3% by investors betting on a Hawkish turn by the BoJ.
However, Wednesday’s summary revealed that the yield cap widening was “not intended to change the direction of monetary easing”, but to keep stimulus sustainable – echoing Governor Haruhiko Kuroda’s statement that it was “definitely not a step toward an exit”.
Adding to the BoJ’s dovish outlook was another round of unscheduled bond-buying, announced on Thursday morning, where it offered to buy unlimited amounts of 2- and 5-year notes. The yen sunk as much as 0.7% against the dollar.
2022 was not a good year for the Japanese yen, sparked largely by a widening policy shift between the ultra-easy Bank of Japan and an increasingly hawkish Federal Reserve.
2023, however, is when many investors are expecting an about-turn for the yen. A dovish turn from the Fed as it tries to steer a soft landing, coupled with a possible hawkish turn from the BoJ, might close the monetary policy gap. Dankse bank believes yield trends to be crucial, giving a 12-month forecast for USDJPY at 128.
Meanwhile, Hachidai Ueda, senior investment specialist of fixed income at abrdn expects yen to strengthen to 130 as the Fed turns dovish “in a quick way” next year.
A few key points to note: Japan’s inflation readings have started to ramp, with the question being how long it can keep up with its ultra-loose monetary policy as consumer prices hit 40-year highs. Secondly, BoJ governer Haruhiko Kuroda’s term is due to end in April 2023 – will a change of guard also herald a new outlook for the central bank?
Japan is the world’s third-largest economy, and a stronger yen would have far-reaching effects, chiefly bringing large amounts of capital back to japan, while impacting the profits of the nation’s exports. Demand for the carry trade using the yen will also sink.
Investors are now advised to look out for December’s Nonfarm Payrolls, which will be released on 6 January 2023, at 15:30 (GMT+2) and is forecast to be at 200K, down from November’s 263K. The NFP is one of the key labour statistics for the U.S, and its outcome will play a part in determining further Fed policy.
As a friendly reminder, do keep an eye on market changes, control your positions, and manage your risk well.
Please note the Website is intended for individuals residing in jurisdictions where accessing the Website is permitted by law.
Please note that PU Prime and its affiliated entities are neither established nor operating in your home jurisdiction.
By clicking the "Acknowledge" button, you confirm that you are entering this website solely based on your initiative and not as a result of any specific marketing outreach. You wish to obtain information from this website which is provided on reverse solicitation in accordance with the laws of your home jurisdiction.
Thank You for Your Acknowledgement!
Ten en cuenta que el sitio web está destinado a personas que residen en jurisdicciones donde el acceso al sitio web está permitido por la ley.
Ten en cuenta que PU Prime y sus entidades afiliadas no están establecidas ni operan en tu jurisdicción de origen.
Al hacer clic en el botón "Aceptar", confirmas que estás ingresando a este sitio web por tu propia iniciativa y no como resultado de ningún esfuerzo de marketing específico. Deseas obtener información de este sitio web que se proporciona mediante solicitud inversa de acuerdo con las leyes de tu jurisdicción de origen.
Thank You for Your Acknowledgement!