Daily Alert – Tuesday 20th December 2022: Bank of Japan moves markets – hurrah!

Mark NugentDaily Alert, Dec 2022

Daily Alert – Tuesday 20th December 2022: Bank of Japan moves markets – hurrah!

Good morning.

We have had some interesting developments overnight.

The Bank of Japan announced, via a tweet, that they were lifting the upper limit of their so-called “yield-curve-control (YCC)” measures to 0.5 percent from the prior 0.25 percent. Why do we care? Well, interest rates have been slightly negative for as long as anyone can remember and inflation, although lower than in the west, is creeping up. So, the time is approaching for the bank to begin to hike interest rates. That’s probably why the YCC limit has been raised. The JPY shot up and the Japan225 dropped like a stone.

Elsewhere, it was revealed in the Reserve Bank of Australia’s 6th December meeting minutes that a “no hike” scenario was considered. This might seem trivial, but it indicates that the peak interest rate is coming into view. The AUD fell significantly, as you would imagine.

I placed no trades. We have almost 4 percent in the bag for this month and I don’t want to exit the year with anything negative.

Looking ahead, we have Retail Sales in Canada and oil inventories.

I’ll be back tomorrow.

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