Japan may delay interest rate hikes

The Japanese yen weakened beyond 156 yen per dollar due to the latest U.S. Federal Reserve policy meeting report, which still indicates that some policy makers remain concerned about persistent inflation and are prepared to maintain higher interest rates for longer to curb it. Conversely, investors predict that the Bank of Japan will delay tightening its monetary policy due to slower growth in the first quarter of 2024.

Japan's exports increased by 8.3% year-on-year, reaching 8,980.75 billion yen, a significant rise from the 7.3% growth in March, driven by strong foreign demand. Most exports were in the automotive sector, which saw over a 19% increase. Additionally, machinery exports rose by 5.8%, with the majority going to key trading partners, especially the U.S. and China.

Imports to Japan grew by 8.3% year-on-year to 9,443.26 billion yen in April. This marks a resurgence in imports, indicating rapidly increasing domestic demand. Fuel imports surged by over 10%, including petroleum and LNG. Moreover, imports of industrial goods increased by 5.2%, mainly driven by various metal productions.

Japan's Producer Price Index (PPI) rose by 0.9% year-on-year in April, stabilizing for the second consecutive month. This increase was primarily due to continuously rising costs from stable energy prices and persistent inflation, which did not decrease as expected. Consequently, the production costs for other goods also increased. Additionally, importing goods while the yen remains weak has been a major factor driving up production costs, potentially leading to higher consumer prices.

Japan's industrial production increased by 4.4% month-on-month in March, after a 0.6% decline in the previous month. This growth was mainly supported by the automotive industry, which rebounded with a 9.9% increase, and production machinery, which grew by 11.6%. Despite the rise in capital expenditures driven by rapid growth in the manufacturing sector, profitability did not increase significantly.

Techical analysis data (5H)

Resistance: 157.14, 157.22, 157.29

Source: Investing.com

Buy/Long 1: If the price touches support in the price range of 156.92 - 156.99 but cannot break the support at 156.99, you may set a TP at approximately 157.22 and SL at around 156.83 or according to your acceptable risk.

Buy/Long 2: If the price breaks the resistance in the price range of 157.14 - 157.22, you may set a TP at approximately 157.29 and SL at around 156.92 or according to your acceptable risk.

Sell/Short 1: If the price touches resistance in the price range of 157.14 - 157.22 but cannot break the resistance at 157.14, you may set a TP at approximately 156.92 and SL at around 157.29 or according to your acceptable risk.

Sell/Short 2: If the price breaks the support in the price range of 156.92 - 156.99, you may set a TP at approximately 156.83 and SL at around 157.22 or according to your acceptable risk.

Pivot point May 24, 2024 06:43 PM. GMT+7