What Awaits as Bank of Japan Policy Grabs the Spotlight?

Tuesday – Bank of Japan policy

The Bank of Japan will hold a policy meeting on Tuesday. The Bank of Japan’s final interest rate requirement and monetary policy statement for 2023. The exact start time for the BoJ’s inevitable rate hike is difficult to determine, but the Bank of Japan is widely expected to keep its benchmark interest rate just below zero, in the negative range of -0.1%.

But market expectations are that the Bank of Japan could end negative interest rates in the coming months, making it another global departure as the Federal Reserve and other major central banks focus on when to start cutting interest rates.

Bank Of Japan Governor Kazuo Ueda said last week the central bank was facing an “even more challenging” situation at year-end and at the start of 2024, jolting markets as speculators ramped up bets that a policy shift was imminent.

Additionally, US building permits are likely to offer some business.

Wednesday – UK CPI, US CB Consumer Confidence

 Macroeconomic numbers, including UK CP m/m and US CB consumer confidence and existing household data, could cheer the market. British inflation is forecast at 4.3%, up from 4.6% previously. This could have a negative impact on the value of the pound.

UK inflation is more than double the Bank of England’s 2% target and the data is likely to confirm that pressures remain high compared to other major economies. 

The pound hit a three-month high against the euro this month after eurozone inflation fell sharply, fueling speculation that the BoE will take longer than the European Central Bank to cut interest rates. But high prices could also push the British economy, which the BoE hopes to align in 2024, into recession, meaning sterling is not a one-way bet.

The rate of the pound depends on whether the BoE continues to respond to the current inflationary trend.

In the US, indicators of consumer confidence are expected to rise to 104.1 from 102.0 previously. meanwhile, current home sales are forecast at 3.77 million, down slightly from 3.79 million previously. Both numbers can support the dollar rate.

Thursday – US GDP

 Final GDP q/q and weekly jobless claims fill the US on Thursday. The GDP indicator is expected to remain unchanged at the level of 5.2 percent. Although jobless claims were expected to come in at 215,000 from 202,000 previously, this could weigh on the dollar.

 Friday – US Core PCE price index m/m

 US personal consumption expenditures (PCE) will take center stage over the weekend. As the Fed’s preferred method of tracking consumer inflation, PCE is well ahead of the market in adjusting its interest rate expectations to 2024. 

Economists expect the PCE price index to remain unchanged for a second month in November at 0.2 percent. the core measure, which strips out fluctuating food and energy costs, will rise by 0.2 percent.

In addition, UK retail sales m/m data will weigh on the pound. This figure is expected to increase by 0.5%, while the contraction is expected to be 0.3%.

Commodity Samachar
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