Amid careful monitoring of the future of the Bank of Japan's policy after its recent surprise, the exchange rate of the currency pair of the US dollar against the Japanese yen USD/JPY is moving in the middle of an upward movement. It is centered around the resistance of 134.40, during an upward rebound from the recent collapse towards the support level of 130.56. Due to recent caution, senior executives expect in Japan's biggest banks expect negative interest rates to continue and see little immediate boost to earnings after a surprise move by Japan's central bank sent the lender's shares up 13% last week.
Earnings won't enjoy a meaningful lift unless the Bank of Japan abandons negative interest, according to three senior executives, who asked not to be identified while publicly discussing central bank policy. But the Bank of Japan is unlikely to raise interest rates immediately – even after a change of governor in April – unless an outside party is chosen to lead the institution, one executive said. that it may be difficult for insiders to get out of the current policy.
Most of the economists who were included in the Bloomberg survey believe that the veterans of the Bank of Japan are the best choices for this position, with current Deputy Governor Masayoshi Amaya and former Deputy Governor Hiroshi Nakasu leading the list. Another executive said the central bank may also risk missing an opportunity to raise interest rates if the global economy suffers a sharp slowdown next year.
He contrasts the lukewarm reaction from executives with investors and analysts growing bullish on Japanese bank stocks, saying the Bank of Japan's move to allow 10-year bond yields to rise to around 0.5% is a prelude to a broader shift in policy. You see the Goldman Sachs Group Inc. "increasingly likely" to abandon negative interest rates. Spokesmen for Japan's second- and third-largest lenders, Sumitomo Mitsui Financial Group Inc. and Mizuho Financial Group Inc., declined to comment on Bank of Japan policy. The Mitsubishi UFJ Financial Group Inc. also refused. , the largest bank in the country, comment.
Shares in Japan's benchmark bank share index rose 13% last week following the policy adjustment that surprised global financial markets. Experts at Morgan Stanley raised their point of view regarding the Japanese lenders as a "hedge", saying that this move is positive for the banks' profits and their valuations because it lifted the sector to overweight from the same weight.
However, Bank of Japan Governor Haruhiko Kuroda stressed on Monday that the bank's latest adjustments to its bond yield control program were not the start of an exit from monetary easing, but a way to make it sustainable and run smoothly. Mizuho estimates it will see an increase of ¥35 billion ($263 million) a year in profits from lending and marketplaces.
Expectations of the US dollar against the Japanese yen today:
- According to the performance on today's chart, the USD/JPY currency pair has started to form a channel opposite to the recent downtrend.
- The bulls' control over the trend will strengthen if it moves towards the resistance levels 135.40 and 138.20 respectively.
- The last level paves the way to move towards the psychological resistance 140.00 again.
The return of the movement towards the support levels 133.30 and 132.70 is the end of the last upward movement. The currency pair may continue to move in a narrow range near the end of the year 2022 trading and the investors will leave in the light of the holiday of many markets.
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