BoJ’s Takata: Need to consider taking flexible response including exit from monetary stimulus

Dhwani Mehta FXStreet

Bank of Japan (BoJ) board member Hajime Takata said on Thursday that the central bank “needs to consider taking flexible response including exit from monetary stimulus.”

Additional takeaways

Achievement of 2% inflation target is becoming in sight despite uncertainty of economy outlook.

Exit measures would include abandoning yield curve control framework, ending negative rates, overshoot commitment.

Need to bear in mind taking balance between effect of easing and side effects.

Economy is entering cycle of rising wages and prices, away from chronic deflation cycle.

In case for entering exit, BoJ would need to conduct appropriate policy steps while paying attention to health of its balance sheet.

Momentum is rising in spring wage talks.

Many companies are offering higher-than-2023 wage hikes.

High wage hike rate would prompt continual expectations that household income will rise.

Small companies are still facing problem in passing costs to prices, but some are making forward-looking investments in productivity, human resources.

Corporate sector is becoming resilient to yield rises at the exit of monetary policy.

Market reaction

The Japanese Yen has caught a fresh bid wave on Takata’s hawkish signals, smashing USD/JPY 0.40% on the day to 150.08, as of writing.

Author

Dhwani Mehta

FXStreet

Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.

EUR/USD off highs, back to around 1.1900

EUR/USD keeps its strong bid bias in place despite recedeing to the 1.1900 zone following earlier peaks north of 1.1900 the figure on Monday. The US Dollar remains under pressure, as traders stay on the sidelines ahead of Wednesday’s key January jobs report, leaving the pair room to extend its upward trend for now.

GBP/USD hits three-day peaks, targets 1.3700

GBP/USD is clocking decent gains at the start of the week, advancing to three-day highs near 1.3670 and building on Friday’s solid performance. The better tone in the British Pound comes on the back of the intense sekk-off in the Greenback and despite re-emerging signs of a fresh government crisis in the UK.

Gold picks up pace, retargets $5,100

Gold gathers fresh steam, challenging daily highs en route to the $5,100 mark per troy ounce in the latter part of Monday’s session. The precious metal finds support from fresh signs of continued buying by the PBoC, while expectations that the Fed could lean more dovish also collaborate with the uptick.

Crypto Today: Bitcoin steadies around $70,000, Ethereum and XRP remain under pressure

Bitcoin hovers around $70,000, up near 15% from last week's low of $60,000 despite low retail demand. Ethereum delicately holds $2,000 support as weak technicals weigh amid declining futures Open Interest. XRP seeks support above $1.40 after facing rejection at $1.54 during the previous week's sharp rebound.

Japanese PM Takaichi nabs unprecedented victory – US data eyed this week

I do not think I would be exaggerating to say that Japanese Prime Minister Sanae Takaichi’s snap general election gamble paid off over the weekend – and then some. This secured the Liberal Democratic Party (LDP) an unprecedented mandate just three months into her tenure.

Ripple exposed to volatility amid low retail interest, modest fund inflows

Ripple (XRP) is extending its intraday decline to around $1.40 at the time of writing on Monday amid growing pressure from the retail market and risk-off sentiment that continues to keep investors on the sidelines.