BOJ to End Negative Interest Rates In 2024, Over 80% of Economists Say

Economic

Central Bank

Summary:

The Bank of Japan will end its negative interest rate policy next year, more than 80 per cent of economists in a Reuters poll said, with more convinced the central bank is getting closer to exiting its controversial monetary settings.

BOJ Governor Kazuo Ueda faces the difficult task of navigating Japan away from the extremely accommodative policy of the past decade without causing market turmoil or squashing a fragile economic recovery.

While none of 26 economists predicted changes in the upcoming December BOJ meeting, many foresaw the negative rate policy, which has set Japan's short-term deposit rate at minus 0.1 per cent, would reach the end of the line next year.

In the Nov. 15-20 poll, 22 of 26, or 85 per cent, of economists said the BOJ would end the policy by the end of next year. That was up from 63 per cent in an October poll and 52 per cent in September.

The remaining four chose "2025 or later."

In an October policy meeting, the BOJ modified its bond yield control by redefining 1.0 per cent as an "upper bound" with room for allowance, rather than a rigid cap.

Having watered down YCC, the BOJ's next focus is to end its negative interest rate policy and push short-term rates to zero, sources previously told Reuters.

Close to 85 per cent of poll respondents forecast the BOJ would end its YCC policy, while the rest said it would tweak the scheme again, the poll found.

Eyes On Next Year

Of 22 economists in the poll who chose 2024 for the end of negative rates, more than a half, 12, opted for the April 25-26 meeting. Three picked July, two went for June and one opted for October.

Four - Capital Economics, Dai-ichi Life Research Institute, Mitsubishi UFJ Morgan Stanley Securities and T&D Asset Management - said that would happen as early as January.

By then, it would become clear for the BOJ to decide the fate of short-term rates taking inflationary pressure and the trend of wage negotiations into consideration, said Hiroshi Namioka, chief strategist and fund manager at T&D Asset Management.

"The negative interest rate will be lifted as an 'inflation response' if inflation is sustained or as a 'continuation of easing' if inflationary pressures appear to be waning," as the BOJ could argue setting the short-term rates at 0.00 per cent is considered loose, Namioka said.

Wages, Economic Measures In Focus

In the poll, 74 per cent of economists said wage growth and base salary increases on average for next year would exceed this year's 3.58 per cent at big Japanese firms. The percentage dipped to 65 per cent when asked whether the same would happen for Japanese businesses in general, including small and mid-size firms.

Meanwhile, nearly two-thirds of economists, 16 of 25, said the chance the government's latest economic package achieves its projection of boosting the rate of GDP growth by 1.2 per cent were "very unlikely."

More than half of respondents in multiple public opinion polls have said they were not impressed by the measures, which includes cutting annual income and other taxes by 40,000 yen ($267.34) per person and paying 70,000 yen to low-income households. The package's unpopularity is cited as one factor of Prime Minister Fumio Kishida's plummeting public support.

"One-off income tax cuts would have a very limited boost effect," said Chiyuki Takamatsu, chief economist at Fukoku Mutual Life Insurance.

($1 = 149.6200 yen)

Source: Reuters

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

You understand and acknowledge that there is a high degree of risk involved in trading. Following any strategies or investment methods may lead to potential losses. The content on the site is provided by our contributors and analysts for information purposes only. You are solely responsible for determining whether any trading assets, securities, strategy, or any other product is suitable for investing based on your own investment objectives and financial situation.

Comments

Add to Favorites

Forex

Dollar decline drama

It's been a testing few weeks for US dollar bulls. The US dollar index, the DXY, is now down over 3% month to date, the sell-off gaining momentum after the cooler-than-expected inflation print.

US dollar weakness in November is generally to be expected. Last year, the USD index, the DXY, fell 5% in November. The USD sell-off coincided with an 8% rally in the S&P 500 during November as the market unwound defensive positioning across multiple asset classes, put on in anticipation of a hard landing.

This November, the sell-off in the US dollar and the rally in equities has come following a run of softer economic data across PMIs, Non-Farm Payrolls, and inflation that raises hopes the Fed has ended its rate-hiking cycle and is on track to deliver an elusive soft landing.

Is it a reversal or just a correction?

While we have likely seen peak growth and interest rates in the US, US growth after the current rebalancing is still expected to outperform, particularly in contrast to the EU and the UK. A situation that will support US earnings, US yields, and the dollar.

On the other side of the coin, if a deeper downturn were to eventuate and/or Donald Trump wins the US Presidential election next year, the anticyclical US dollar would likely be supported. Hence, the USD wins again.

USD vs. JPY: a wild card

The biggest wild card could be the USD against the JPY. While we are inclined to think a multiyear double high is in place for USD/JPY at 151.95ish and that the JPY is beyond cheap, the USD still holds a significant yield advantage over the JPY. Some aggressive normalization of BoJ policy is required for that to change.

DXY technical analysis

The rally in the US dollar index, the DXY, from the July 99.57 low took the DXY to 107.34, the 50% fibo retracement of the decline from the October 2022 114.78 high to the July 2023 99.57 low. The retreat from the 107.34 high saw the DXY this week test the 200-day moving average, currently at 103.61, the level at which the DXY closed overnight.

Given the DXY's attempt overnight to reclaim support coming from the 200-day moving average and the oversold nature of the decline, we suspect a bounce is looming that sets up some range trading into yearend. A range that might look like something like 103.00 to 105.50ish.

If the DXY were to lose the support of the DXY for a sustained period, it would warn that a deeper decline is underway. Reversal or Correction? Insights from the DXY Index_1

Reversal or Correction? Insights from the DXY Index_1

Risk Warnings and Disclaimers

Comments

Add to Favorites

IC Markets

Forex

Stocks

Commodity

Energy

Cryptocurrency

DXY

The DXY (US Dollar Index) chart currently indicates a bullish momentum, suggesting a potential bullish continuation towards the first resistance at 103.99.

The first support at 103.17 is identified as a swing low support, indicating a level where the price might find buying interest. Additionally, the second support at 102.82 is recognized as an overlap support, reinforcing the potential strength of the support zone.

On the resistance side, the first resistance at 103.99 is significant due to its pullback resistance, marking a crucial level where the price might face selling pressure or potential reversals within its upward movement. Furthermore, the second resistance at 104.54 is identified as another overlap resistance, emphasizing its importance as a potential hurdle for the price and a point where it might encounter obstacles in its bullish continuation.

EUR/USD

The EUR/USD chart currently indicates a bearish momentum, suggesting a potential bearish continuation towards the first support at 1.0882.

The first support at 1.0882 is identified as a pullback support, coinciding with the 23.60% Fibonacci Retracement and the 100% Fibonacci Projection, indicating a level where the price might find buying interest. Additionally, the second support at 1.0766 is recognized as another pullback support, coinciding with the 61.80% Fibonacci Retracement, reinforcing the potential strength of the support zone.

On the resistance side, the first resistance at 1.0960 is significant due to its swing high resistance, marking a crucial level where the price might face selling pressure or potential reversals within its downward movement. Furthermore, the second resistance at 1.1047 is identified as a multi-swing high resistance, emphasizing its importance as a potential hurdle for the price and a point where it might encounter obstacles in its bearish continuation.

It’s noteworthy that the RSI (Relative Strength Index) is displaying bearish divergence versus price, suggesting that a reversal might occur soon.

EUR/JPY

The EUR/JPY chart currently indicates a bullish momentum, suggesting a potential drop to the first support at 161.54 in the short term before bouncing and rising towards the first resistance at 162.36.

The first support at 161.54 is identified as a swing low support, indicating a level where the price might find buying interest. Additionally, the second support at 160.99 is recognized as a pullback support, coinciding with the 61.80% Fibonacci Retracement, reinforcing the potential strength of the support zone.

On the resistance side, the first resistance at 162.36 is significant due to its overlap resistance, marking a crucial level where the price might face selling pressure or potential reversals within its upward movement. Furthermore, the second resistance at 163.25 is identified as another overlap resistance, emphasizing its importance as a potential hurdle for the price and a point where it might encounter obstacles in its bullish continuation.

EUR/GBP

The EUR/GBP chart currently indicates a bullish momentum, suggesting a potential bullish bounce off the first support at 0.8697 towards the first resistance at 0.8731.

The first support at 0.8697 is identified as a swing low support, coinciding with the 100% Fibonacci Projection, indicating a level where the price might find buying interest. Additionally, the second support at 0.8663 is recognized as another swing low support, reinforcing the potential strength of the support zone.

On the resistance side, the first resistance at 0.8731 is significant due to its pullback resistance, marking a crucial level where the price might face selling pressure or potential reversals within its upward movement. Furthermore, the second resistance at 0.8762 is identified as an overlap resistance, emphasizing its importance as a potential hurdle for the price and a point where it might encounter obstacles in its bullish continuation.

GBP/USD

The GBP/USD chart currently shows a bearish overall momentum, and there is a potential scenario for the price to rise towards the first resistance at 1.2586 in the short term before reversing off it and dropping towards the first support at 1.2398.

The first support at 1.2398 is considered significant as an overlap support, indicating a level where the price might find buying interest. Additionally, the second support at 1.2206 is recognized as a swing low support, reinforcing the potential strength of the support zone.

On the resistance side, the first resistance at 1.2586 is crucial due to its nature as an overlap resistance, coinciding with the 50% Fibonacci Retracement and the 61.80% Fibonacci Projection, indicating a level where the price might face selling pressure or potential reversals within its upward movement. Furthermore, the second resistance at 1.2732 is identified as another overlap resistance, coinciding with the 61.80% Fibonacci Retracement, emphasizing its importance as a potential hurdle for the price.

It’s noteworthy that the RSI (Relative Strength Index) is displaying bearish divergence versus price, suggesting that a reversal might occur soon.

GBP/JPY

The GBP/JPY chart currently indicates a bullish momentum, suggesting a potential bullish bounce off the first support at 185.60 towards the first resistance at 186.46.

The first support at 185.60 is identified as a pullback support, coinciding with the 38.20% Fibonacci Retracement, indicating a level where the price might find buying interest. Additionally, the second support at 184.62 is recognized as a multi-swing low support, coinciding with the 61.80% Fibonacci Projection, reinforcing the potential strength of the support zone.

On the resistance side, the first resistance at 186.46 is significant due to its swing high resistance, marking a crucial level where the price might face selling pressure or potential reversals within its upward movement. Furthermore, the second resistance at 187.38 is identified as a pullback resistance, coinciding with the 78.60% Fibonacci Retracement, emphasizing its importance as a potential hurdle for the price and a point where it might encounter obstacles in its bullish continuation.

USD/CHF

The USD/CHF chart currently reflects a neutral overall momentum, indicating a lack of a clear directional bias. There is a potential scenario for the price to fluctuate between the 1st resistance at 0.8865 and the 1st support level at 0.8824.

The 1st support at 0.8824 is considered significant as a multi-swing low support, indicating a level where the price has previously found support across multiple swings. Additionally, it coincides with the 61.80% Fibonacci Retracement, reinforcing its potential as a strong support level.

The 2nd support at 0.8758 is also recognized as a multi-swing low support, further emphasizing the importance of this support zone. Additionally, it aligns with the 100% Fibonacci Projection, indicating potential buying interest at this level.

On the resistance side, the 1st resistance at 0.8865 is crucial due to its nature as a pullback resistance, suggesting a level where the price might face selling pressure or potential reversals within its upward movement.

The 2nd resistance at 0.8901 is identified as an overlap resistance, coinciding with the 38.20% Fibonacci Retracement, emphasizing its significance as a potential hurdle for the price.

USD/JPY

The USD/JPY chart currently has an overall bearish momentum, suggesting the potential for a bearish continuation towards the 1st support. There is a possibility that the price might exhibit a bearish reaction off the 1st resistance and subsequently drop to the 1st support.

The 1st support level is identified at 147.49, and the reason it is considered favorable is due to the presence of an overlap support.

The 2nd support level is located at 146.19, and its favorable aspect is attributed to being a swing low support as well as being at the 38.20% Fibonacci Retracement level.

On the resistance side, the 1st resistance is situated at 148.40, and it is deemed significant due to being an overlap resistance.

The 2nd resistance is positioned at 149.30, and its significance is derived from being a pullback resistance and coinciding with the 50% Fibonacci Retracement level.

USD/CAD

The USD/CAD chart currently exhibits an overall bearish momentum, indicating the potential for a bearish continuation towards the 1st support should price break below the intermediate support.

The intermediate support level at 1.3693 is identified as a multi-swing low support while the 1st support level at 1.3666 is also considered as a swing low support. Further below, the 2nd support level at 1.3629 is identified as a swing-low support that aligns with the 78.60% Fibonacci projection level, further reinforcing the potential for price to find support in this region.

On the resistance side, the 1st resistance level at 1.3769 is categorized as an overlap resistance. Higher up, the 2nd resistance level at 1.3822 is also noted as an overlap resistance, potentially acting as a barrier to further upward movement.

AUD/USD

The analyzed instrument is AUD/USD, and the overall momentum of the chart is currently bearish.

There is a potential for the price to undergo a bearish continuation towards the 1st support.

The 1st support level is identified at 0.6522, and its favorable characteristic is attributed to being a pullback support, coinciding with the 23.60% Fibonacci Retracement level.

The 2nd support level is situated at 0.6455, and its favorable aspects are twofold—it is an overlap support and aligns with the 50% Fibonacci Retracement level.

On the resistance side, the 1st resistance is positioned at 0.6585, and it is considered significant due to being a multi-swing high resistance.

The 2nd resistance is located at 0.6642, and its significance is derived from being a pullback resistance, coinciding with the 161.80% Fibonacci Extension and the 100% Fibonacci Projection, indicating Fibonacci confluence.

Additionally, the Relative Strength Index (RSI) is displaying bearish divergence versus the price, suggesting that a reversal might occur soon.

NZD/USD

The analyzed instrument is NZD/USD, and the overall momentum of the chart is currently bearish.

There is a potential for the price to undergo a bearish break off the 1st support and subsequently drop towards the 2nd support.

The 1st support level is identified at 0.6048, and its favorable characteristic is attributed to being a pullback support.

The 2nd support level is situated at 0.6012, and its favorable aspects are twofold—it is an overlap support and aligns with the 50% Fibonacci Retracement level.

On the resistance side, the 1st resistance is positioned at 0.6094, and it is considered significant due to being a swing high resistance and coinciding with the 127.20% Fibonacci Extension.

Additionally, the Relative Strength Index (RSI) is displaying bearish divergence versus the price, suggesting that a reversal might occur soon.

DJ30

The DJ30 chart currently indicates a bullish momentum, suggesting a potential bullish bounce off the first support at 35074.70 towards the first resistance at 35363.77.

The first support at 35074.70 is identified as a pullback support, indicating a level where the price might find buying interest. Additionally, the second support at 34827.78 is recognized as a swing low support, reinforcing the potential strength of the support zone.

On the resistance side, the first resistance at 35363.77 is significant due to its multi-swing high resistance, marking a crucial level where the price might face selling pressure or potential reversals within its upward movement. Furthermore, the second resistance at 35568.54 is identified as a swing high resistance, emphasizing its importance as a potential hurdle for the price and a point where it might encounter obstacles in its bullish continuation.

GER40

The GER40 chart currently indicates a bullish momentum, suggesting a potential bullish continuation towards the first resistance at 15971.9.

The first support at 15869.0 is identified as an overlap support, indicating a level where the price might find buying interest. Additionally, the second support at 15804.6 is recognized as another overlap support, reinforcing the potential strength of the support zone.

On the resistance side, the first resistance at 15971.9 is significant due to its swing high resistance, marking a crucial level where the price might face selling pressure or potential reversals within its upward movement. Furthermore, the second resistance at 16049.1 is identified as a multi-swing high resistance, emphasizing its importance as a potential hurdle for the price and a point where it might encounter obstacles in its bullish continuation.

US500

The US500 chart currently indicates a bullish momentum, suggesting a potential bullish bounce off the first support at 4530.1 towards the first resistance at 4596.8.

The first support at 4530.1 is identified as an overlap support, indicating a level where the price might find buying interest. Additionally, the second support at 4493.8 is recognized as a multi-swing low support, reinforcing the potential strength of the support zone.

On the resistance side, the first resistance at 4596.8 is significant due to its swing high resistance, marking a crucial level where the price might face selling pressure or potential reversals within its upward movement. Furthermore, the intermediate resistance at 4555.2 is identified as a swing high resistance, emphasizing its importance as a potential hurdle for the price and a point where it might encounter obstacles in its bullish continuation.

BTC/USD

The BTC/USD chart currently indicates a bullish momentum, suggesting a potential bullish continuation towards the first resistance at 36718.

The first support at 35717 is identified as a multi-swing low support, indicating a level where the price might find buying interest. Additionally, the second support at 35197 is recognized as another multi-swing low support, reinforcing the potential strength of the support zone.

On the resistance side, the first resistance at 36718 is significant due to its pullback resistance, marking a crucial level where the price might face selling pressure or potential reversals within its upward movement. Furthermore, the second resistance at 37987 is identified as a multi-swing high resistance, emphasizing its importance as a potential hurdle for the price and a point where it might encounter obstacles in its bullish continuation.

ETH/USD

The ETH/USD chart currently indicates a bullish momentum, suggesting a potential bullish continuation towards the first resistance at 2070.20.

The first support at 1911.92 is identified as an overlap support, indicating a level where the price might find buying interest. Additionally, the second support at 1859.43 is recognized as another overlap support, reinforcing the potential strength of the support zone.

On the resistance side, the first resistance at 2070.20 is significant due to its multi-swing high resistance, marking a crucial level where the price might face selling pressure or potential reversals within its upward movement. Furthermore, the second resistance at 2129.57 is identified as another multi-swing high resistance, emphasizing its importance as a potential hurdle for the price and a point where it might encounter obstacles in its bullish continuation.

WTI/USD

The analyzed instrument is WTI, and the overall momentum of the chart is currently bearish.

There is a potential for the price to undergo a bearish continuation towards the 1st support.

The 1st support level is identified at 72.67, and its favorable characteristics include being an overlap support and coinciding with the 78.60% Fibonacci Projection.

On the resistance side, the 1st resistance is positioned at 80.08, and it is considered significant due to being a pullback resistance.

The 2nd resistance is located at 83.09, and its significance is attributed to being an overlap resistance and aligning with the 61.80% Fibonacci Retracement.

An intermediate resistance is also noted at 78.43, and its significance is derived from being a swing high resistance.

XAU/USD (GOLD)

The analyzed instrument is XAU/USD, and the overall momentum of the chart is currently bullish.

There is a potential for the price to make a bullish bounce off the 1st support and head towards the 1st resistance.

The 1st support level is identified at 1994.65, and its favorable characteristic is attributed to being a pullback support.

The 2nd support level is situated at 1962.59, and its favorable aspect is twofold—it is a pullback support and coincides with the 61.80% Fibonacci Retracement level.

On the resistance side, the 1st resistance is positioned at 2009.35, and it is considered significant due to being a multi-swing high resistance.

The 2nd resistance is located at 2038.19, and its significance is derived from being a swing high resistance. Technical Outlook and Review_18

Risk Warnings and Disclaimers

Comments

Add to Favorites

Thomas

Palestinian-Israeli conflict

Latest news on the Israeli-Palestinian conflict