Bank of Japan Summary (January 17 - 18, 2023)
- The BoJ must conduct a policy review at some point, although the prudent move now is to maintain loose monetary policy along with yield curve control
- When the time comes to move away from dovish policy, the BoJ must assess whether the market is ready for a change
- There is still some time left to reach the BoJ's monetary policy target, and markets should accept this
- Japan's consumer inflation is not expected to slow down until the second half of next year
- The key is to produce a healthy economic cycle and achieve the BoJ's policy target, one banker signaled, adding time is needed to analyze the impact of the December move
An important conclusion from the BoJ's summary is that the bank is indeed allowing for a possible change in extremely dovish monetary policy although it is postponing it to the indefinite future. This is likely to encourage the market to continue speculating on the yen
Start investing today or test a free demo
Create account Try a demo Download mobile app Download mobile appThe Bank of Japan's chief currency diplomat, Masato Kanda, also gave an interview to Reuters after the Bank of Japan Summary:
- Violent currency movements driven by speculative trading like those that occurred on the yen last week are unacceptable
- The BoJ seeks price stability, while Japan's Ministry of Finance seeks stable currency movements. Excessive currency volatility and irregular movements can threaten economic and financial stability.
- Exchange rates are largely determined by market forces. It is important that currency markets move steadily in response to economic fundamentals.
The USDJPY has crossed the 38.2 Fibonacci retracement of the upward wave initiated on January 16, and is once again heading for the vicinity of the SMA 100 (black line) and the 23.6 Fibo retracement, which indicates a possible retest of the psychological level of 130 points. In the event that a downward impulse is triggered, the first support level is around 129 pts, which was defended today. The next noteworthy levels are 61.8 and 71.6 Fibo near 128.7 and 128.3 points.
Source: xStation5
The content of this report has been created by XTB S.A., with its registered office in Warsaw, at Prosta 67, 00-838 Warsaw, Poland, (KRS number 0000217580) and supervised by Polish Supervision Authority ( No. DDM-M-4021-57-1/2005). This material is a marketing communication within the meaning of Art. 24 (3) of Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU (MiFID II). Marketing communication is not an investment recommendation or information recommending or suggesting an investment strategy within the meaning of Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse (market abuse regulation) and repealing Directive 2003/6/EC of the European Parliament and of the Council and Commission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC and Commission Delegated Regulation (EU) 2016/958 of 9 March 2016 supplementing Regulation (EU) No 596/2014 of the European Parliament and of the Council with regard to regulatory technical standards for the technical arrangements for objective presentation of investment recommendations or other information recommending or suggesting an investment strategy and for disclosure of particular interests or indications of conflicts of interest or any other advice, including in the area of investment advisory, within the meaning of the Trading in Financial Instruments Act of 29 July 2005 (i.e. Journal of Laws 2019, item 875, as amended). The marketing communication is prepared with the highest diligence, objectivity, presents the facts known to the author on the date of preparation and is devoid of any evaluation elements. The marketing communication is prepared without considering the client’s needs, his individual financial situation and does not present any investment strategy in any way. The marketing communication does not constitute an offer of sale, offering, subscription, invitation to purchase, advertisement or promotion of any financial instruments. XTB S.A. is not liable for any client’s actions or omissions, in particular for the acquisition or disposal of financial instruments, undertaken on the basis of the information contained in this marketing communication. In the event that the marketing communication contains any information about any results regarding the financial instruments indicated therein, these do not constitute any guarantee or forecast regarding the future results.
