The Japanese economy remains fragile.

The yen has continuously weakened, exceeding 148 yen per US dollar. Additionally, Japan's Finance Minister, Taro Aso, stated that the government closely monitors the currency market as exchange rate stability is crucial. The currency market reflects fundamental economic factors, prompting investors to be cautious, and attention is directed towards the possibility of changes in monetary policy by the Bank of Japan in future meetings.

Japan's machinery orders, excluding those for ships and electric power companies, decreased by 4.9% month-on-month in November. This decline is attributed to a significant reduction in capital spending, with the manufacturing sector experiencing a substantial 7.8% drop, while non-manufacturing saw a marginal decrease of 0.4%. The decline in machinery orders may indicate a potential slowdown in future production.

The inflation rate in Japan decreased to 2.6% year-on-year in December, down from 2.8% in the previous month. This reversal follows a slight increase in October 2023. The minimal 6.7% rise in food prices, the smallest in 14 months, is attributed to lower prices for food manufacturing components such as eggs, meat, fresh fruits, and seafood. Meanwhile, fuel and electricity prices continued to decline for the 11th consecutive month.

Manufacturers' confidence index in Japan fell to 6 in January from 12 in December, marking the first decrease in four months. Concerns persist regarding the fragile domestic consumption and external uncertainties, particularly from the economic slowdown in China. Prolonged tensions in Ukraine and the conflict between Israel and Hamas also contribute to restrained spending by trading partners.

The value of loans in Japan increased by 3.1% year-on-year in December, maintaining continuous growth since October. The boost in credit value is driven by major and local banks releasing more loans, with a substantial increase totaling 614.5 trillion yen.

The yield on Japan's 10-year government bonds rose by more than 0.67%, following the upward trend in the US. Investors are adjusting their expectations for interest rate cuts in March. There are predictions that the Bank of Japan might reintroduce interest rate hikes.

Techical analysis data (5H)

Resistance: 148.2, 148.5, 148.73

Source: Investing.com

Buy/Long 1: If the price touches support in the price range of 147.44 - 147.68 but cannot break the support at 147.68, you may set a TP at approximately 148.5 and SL at around 147.15 or according to your acceptable risk.

Buy/Long 2: If the price breaks the resistance in the price range of 148.2 - 148.5, you may set a TP at approximately 148.73 and SL at around 147.44 or according to your acceptable risk.

Sell/Short 1: If the price touches resistance in the price range of 148.2 - 148.5 but cannot break the resistance at 148.2, you may set a TP at approximately 147.44 and SL at around 148.73 or according to your acceptable risk.

Sell/Short 2: If the price breaks the support in the price range of 147.44 - 147.68, you may set a TP at approximately 147.15 and SL at around 148.5 or according to your acceptable risk.

Pivot point January 22, 2024 01:35 PM. GMT+7