Read on the Trading Floor - 07 Dec 2023
Today’s focus… JPY, JPY and errr JPY
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Macro Themes At Play
Theme 1 - JPY on the move
Theme 2 - EU/China Summit
Theme 3 - Dec trends continue
Theme 4 - Lowering Norges expectations
Further reading and listening of note
Theme 1 - JPY on the move
Lower oil prices (improving its current account), softer US yields, options short gamma and of course Ueda's comments (below) have the mkt focused on a 2.3% move in $JPY today.
"We could either keep the interest rate applied to reserves (financial institutions park with the central bank), or revert to a policy targeting the overnight call rate,"
"Whether we keep short-term rates at zero or move them to 0.1%, and at what speed we will push up rates to 0.25% or 0.50%, would depend on economic and financial conditions at the time.“
"I explained that the BOJ hopes to check whether wages will rise sustainably including next year, whether higher wages will push up service prices, and the strength of domestic demand,"
"There are various options. But we have not made a decision yet on which interest rate to target once we end our negative interest rate policy,"
The impending BoJ meetings are live on Dec 18-19 and Jan 22-23 meetings. However, despite the odds of Dec going to 50-50 for a rate hike, surely he'll wait to see the new year wage agreements before going?
Bloomberg - BOJ Deputy Chief Hints That Negative Rate End May Be Closer
Reuters - BOJ chief meets premier Kishida, explains focus on wages, demand
Nikkei - BOJ lays groundwork for end of Japan's negative rates
Across The Spread by Weston Nakamura - Heads up: Potential JPY Surge In Immediate
Steno Research - Trade Alert: Wrongfooted by Ueda and Gas
Brent Donnelly - JPY and CHF
Bloomberg - Traders Pile Into Bets That End of Negative BOJ Rate Is Near