USDJPY is moving in a Descending channel and the market has fallen from the lower high area of the channel.
After posting a loss of 0.8% in the third quarter, expectations are looking up for the Japanese economy, which is projected to post a growth rate of 2% in the fourth quarter. The nation of Japan reopened its doors to visitors in October, which sparked a rebound in the country’s services sector. This is anticipated to lead to an increase in GDP. Even still, the economy is facing headwinds such as increased inflation and a weaker global economy, both of which will likely have a dampening effect on growth in the first quarter of 2023.
BOJ Governor Change
There has been much speculation on who would succeed Haruhiko Kuroda as Governor of the Bank of Japan, and rumors in the news regarding a potential replacement have caused the Japanese yen to exhibit a great deal of volatility.
EURJPY is moving in a Ascending channel and the market has reached the higher low area of the channel.
A claim that Deputy Governor Masayoshi Amamiya had been contacted for the role moved the yen momentarily lower last week. Amamiya is seen as a dove. Thus, the story sent the currency in the other direction. Amamiya turned down the offer, and as a result, the Bank of Japan (BoJ) has taken the unexpected step of deciding to choose Kazua Ueda. The announcement originally caused a rise in the value of the yen since the markets saw the pick as a hint that new ideas and a shift in policy would be implemented.
This notion was swiftly debunked by Ueda himself, who stated on Friday that the policy arrangements that are currently in place are suitable. Because of this, the value of the yen dropped significantly on Monday. It is probable that Ueda is attempting to appear diplomatic in order to avoid making any ripples in the lead-up to his appointment, and it is highly likely that he will tighten policies once he is in control. Since it is widely anticipated that the Bank of Japan will continue to adhere to its ultra-loose policy, it is unlikely that the Bank of Japan will provide any support for the yen in the near future.
Japan Cost of Living
According to statistics released on Friday, wholesale prices in Japan increased by 9.5% in January compared to the same month a year earlier. This adds to the rising number of signals of inflationary stresses, which may put the central bank under pressure to phase down its enormous stimulus program.
GBPJPY is moving in Ascending Channel and the market has fallen from the higher high area of the channel.
Despite the fact that the rate of growth slowed down from the previous month’s increase of 10.5%, the statistics underscored the cost-push pressure that businesses were facing for products ranging from food and steel to chemical goods.
The increase in the corporate goods price index (CGPI), which measures the price firms charge each other for their products and services, substantially met a median market prediction for a gain of 9.6%. The CGPI measures the price companies charge each other for their goods and services. According to data provided by the Bank of Japan, the index reached a new all-time high of 119.8 in December.
On Friday, the Governor of the Bank of Japan, Haruhiko Kuroda, reaffirmed his belief that the recent jump in consumer inflation was mostly caused by rising import costs, and he anticipates a slowdown later this year.
Japan Employment Crisis
Japan’s wages remain stagnant partly because of the country’s distinctive work culture. Many individuals have jobs under the old model of lifelong employment, in which employers would go to great efforts to ensure that employees remain on the payroll for the rest of their lives.
CADJPY is moving in Ascending Channel and the market has fallen from the higher high area of the channel.
This indicates that they are often very careful about boosting pay when times are good so that they will have the resources necessary to safeguard their workers when times are difficult. Its seniority-based pay structure, in which individuals are paid based on their rank and length of service rather than on the performance of the work they do, reduces the incentives for people to change employment, which, in most other nations, is one factor that helps push up wages.
Trilateral Defense Pact
Amidst rising tensions with China and fears that it may be drawn into a conflict involving Taiwan, the Philippines is currently reviewing the terms of a proposed tripartite security pact with the United States and Japan.
This comes after the Philippines signed separate defense deals with both of these countries. During his five-day visit to Tokyo, Philippine President Ferdinand Marcos Jr. shared with Kyodo News that the issue was brought up in conversation with Prime Minister Fumio Kishida. Marcos was in Japan for an official visit.
Japan Inflation Crisis
As a result of businesses passing on greater expenses to their customers, Japan’s inflation rate has increased to a new level that hasn’t been seen in 41 years. The year-over-year increase in core consumer prices for the most recent month was 4%, which is twice the amount that the Bank of Japan (BOJ) had set as its aim. As a result, further pressure is placed on the country’s central bank to raise interest rates in order to combat the growing cost of living.
AUDJPY is moving in a Descending channel and the market has broken the lower high area of the channel.
The Bank of Japan (BOJ) startled investors this week when it announced that it would hold interest rates around zero, despite the growing cost of a wide variety of goods and services, including food and petrol. The most recent official statistics, which were published on Friday, revealed that inflation had reached its highest level since 1981. This marks the ninth consecutive month in which inflation has been higher than the 2% objective set by the central bank.
Japan still has one of the lowest inflation rates in the world, even with the recent spike in prices. The Bank of Japan (BOJ) maintained interest rates at or around zero on Wednesday, which led to a decline in the value of the yen in comparison to other major currencies. In an effort to put a lid on growing prices, many industry professionals had anticipated that the central bank would begin winding down its economic stimulus program.
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