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The vast majority of retail investor accounts lose money when trading CFDs / Spread betting with this provider.
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. The vast majority of retail investor accounts lose money when trading CFDs / Spread betting with this provider. You should consider whether you understand how CFDs / Spread betting work and whether you can afford to take the high risk of losing your money.
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USDJPY is Testing 133 Key Support Level

The week ahead is very quiet on the economic data front, and investors can look at the bigger picture. 

With no data and thin markets, USDJPY is showing a test of a critical support level that should dominate price action in January. 

USDJPY – Weekly Chart

USDJPY – Weekly Chart

After soaring to 150 in late September, the USDJPY exchange rate has since slumped to 132.89. The situation has pleased the Bank of Japan. 

As we move into the New Year, that 133 support level will determine whether we see a further pullback in the US dollar or an advance in the weeks ahead. 

The Bank of Japan is still distancing itself from an end to stimulus and low-interest rates. “This is definitely not a step toward an exit,” Bank of Japan Governor Haruhiko Kuroda said on Monday. His comments are related to a recent shock decision to tweak the bank’s cap on yields, which has been in place since 2016.

Kuroda said the BOJ’s decision to widen the allowance band on its yield was to enhance the ultra-easy policy against withdrawing its massive stimulus program. He also noted that Japan’s consumer inflation will likely slow below the BOJ’s 2% target in the next fiscal year due to the effects of soaring import costs dissipating.

Kuroda added that wage growth will likely increase slowly due to intensifying labour shortages and structural changes in the Japanese job market. This would cause pay to increase for temporary workers and the number of permanent workers. 

“Labour market conditions in Japan are projected to tighten further, and firms’ price- and wage-setting behaviour is also likely to change,” Kuroda said. 

“In this sense, Japan is approaching a critical juncture in breaking out of a prolonged period of low inflation and low growth,” he said. 

Investors will keep an eye on Japan’s inflation figures over the coming year as the US dollar has soared on higher yields for its government bonds.

Last Updated: 27/12/2022

This market commentary and analysis has been prepared for ATFX by a third party for general information purposes only. Any view expressed does not constitute a personal recommendation or solicitation to buy or sell as it does not take into account your personal circumstances or objectives, and should therefore not be interpreted as financial, investment or other advice, or relied upon as such. You should therefore seek independent advice before making any investment decisions. This information has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. We aim to establish and maintain and operate effective organisational and administrative arrangements with a view to taking all reasonable steps to prevent conflicts of interest from constituting or giving rise to a material risk of damage to the interests of our clients. The market data is derived from independent sources believed to be reliable, however we make no representation or warranty of its accuracy or completeness, and accept no responsibility for any consequence of its use by recipients. Reproduction of this information, in whole or in part, is not permitted.


 

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