The Bank of Japan continues to keep the interest rate at -0.1%.
The Japanese yen remains stable at 150 yen per dollar, amid concerns about a potential economic downturn due to the Federal Reserve's (Fed) interest rate hikes. Investors believe that the Fed's interest rates are at their highest point, with declining non-agricultural job numbers and rising unemployment starting to feel the impact of the increased interest rates this year.
The Bank of Japan (BoJ) has maintained its interest rate at -0.1% in its recent meeting. BoJ has adjusted its inflation expectations upwards for 2023 and 2024 to 2.8% from 1.3% and 2.2%, respectively, which still exceeds the target of 2%. This is due to the risks related to energy prices, which could increase if the conflict escalates further.
In addition to keeping interest rates stable, BoJ has also set a new framework for the maximum yield on government bonds at 1%, as policymakers anticipate a moderate economic recovery in Japan due to its resilient nature. BoJ also has the option to implement additional monetary easing measures if necessary.
Japan's manufacturing sector's Purchasing Managers' Index (PMI) saw a slight increase to 48.7 in October, but production and new orders decreased. Export volumes shrank significantly due to a decrease in orders from China, a key trading partner. This led to a reduction in hiring, while prices continued to rise due to manufacturers passing on higher costs to customers.
The PMI for the services sector in Japan increased to 51.6 in October, with new orders expanding slightly, supported by government stimulus. This also led to an increase in hiring. However, the prices for raw materials continued to rise, while the output prices did not increase significantly.
Retail sales in Japan increased by 5.8% YoY in September, indicating continued strong household spending and a recovery from the pandemic. Sales of petroleum, food, and beverages showed significant growth, and Japan's oil imports remained high.
The yield on Japan's 10-year government bonds decreased to 0.91% from 0.95%, reflecting reduced concerns about the Fed's interest rates, which have also impacted global government bond yields. BoJ has maintained its JGB 10-year yield target at around 0% but expanded the yield range to 1% from 0.5%. BoJ has also announced a reduction in its purchases of Japanese government bonds.
Techical analysis data (5H)
Resistance: 149.65, 149.77, 149.86
Support: 149.44, 149.35, 149.23
Buy/Long 1: If the price touches support in the price range of 149.35 - 149.44 but cannot break the support at 149.44, you may set a TP at approximately 149.77 and SL at around 149.23 or according to your acceptable risk.
Buy/Long 2: If the price breaks the resistance in the price range of 149.65 - 149.77, you may set a TP at approximately 149.86 and SL at around 149.35 or according to your acceptable risk.
Sell/Short 1: If the price touches resistance in the price range of 149.65 - 149.77 but cannot break the resistance at 149.65, you may set a TP at approximately 149.35 and SL at around 149.86 or according to your acceptable risk.
Sell/Short 2: If the price breaks the support in the price range of 149.35 - 149.44, you may set a TP at approximately 149.23 and SL at around 149.77 or according to your acceptable risk.