Japan's inflation rate has declined again.

The Japanese yen has stabilized after a slight depreciation over the past week amid political uncertainty leading up to Japan’s domestic elections. This has left the Bank of Japan’s interest rate hike direction uncertain. Meanwhile, investors are carefully reviewing additional data to better anticipate the central bank's future moves.

Kazuhiko Aoki, Deputy Secretary of Japan's Cabinet, stated that the government is closely monitoring currency movements since the yen has shown a stronger-than-expected depreciation since the last intervention in July. Additionally, the yen remains pressured by a strengthening U.S. dollar, as investors speculate that the U.S. Federal Reserve may cautiously reduce interest rates and place bets on Trump’s potential election victory next month, which would directly impact the economy.

Japan's annual inflation rate fell to 2.5% in September from 3.0% in the previous month, marking the lowest level since April. This inflation rate is primarily influenced by the smallest increase in electricity prices in three months, following the end of government energy subsidies in May. Additionally, food costs rose slightly by 3.4%. However, housing inflation remained stable, reflecting a continued decline in households’ purchasing power for large goods.

Japan’s Composite PMI dropped to 49.4 in October, marking the first contraction in private sector activity since June. The manufacturing sector has shown a continued slowdown, while service sector activity contracted for the first time in four months as new orders fell sharply after a rise in the previous quarter, driven by slowing foreign demand. This has also led to a slowdown in employment growth, indicating the current economic downturn’s impact.

Japan’s 10-year government bond yield remained steady at 0.98% as investors grew increasingly cautious amid political uncertainty ahead of Japan’s election, which may impact the Bank of Japan’s unclear rate hike direction. Furthermore, Japanese government bond yields continued to be supported by the rising yield of U.S. government bonds, as investors anticipated the Federal Reserve might reduce interest rates less than expected in November.

Techical analysis data (5H)

Resistance: 152.1, 152.32, 152.53

Source: Investing.com

Buy/Long 1: If the price touches support in the price range of 151.46 - 151.68 but cannot break the support at 151.68, you may set a TP at approximately 152.32 and SL at around 151.25 or according to your acceptable risk.

Buy/Long 2: If the price breaks the resistance in the price range of 152.1 - 152.32, you may set a TP at approximately 152.53 and SL at around 151.46 or according to your acceptable risk.

Sell/Short 1: If the price touches resistance in the price range of 152.1 - 152.32 but cannot break the resistance at 152.1, you may set a TP at approximately 151.46 and SL at around 152.53 or according to your acceptable risk.

Sell/Short 2: If the price breaks the support in the price range of 151.46 - 151.68, you may set a TP at approximately 151.25 and SL at around 152.32 or according to your acceptable risk.

Pivot point October 25, 2024 09:58 AM. GMT+7