JPY holds its ground. Overview for 18.12.2023

The Japanese yen, in the pair with the US dollar, appears just as strong on Monday. The current USDJPY exchange rate stands at 142.19.

Market attention is shifting to the December meeting of the Bank of Japan scheduled for Tuesday this week. Monetary policy will likely remain unchanged. However, investors are actively discussing the possibility of a hawkish reversal in 2024. The current state of Japan’s economy hardly requires any changes in the BoJ’s monetary policy structure. There are many uncertainties, with statistics indicating a fragile state of the economy with falling inflation.

The most probable scenario is a shift in the rhetoric by April.

In addition to apparent factors and macroeconomic statistics, the Bank of Japan closely monitors wage parameters, which is worth paying attention to.

Some new nuances in monetary comments will likely emerge as early as tomorrow, signalling a further step towards a spring reversal of the fiscal trend.