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Futures Commentary by Everbright Futures: Overnight, COMEX gold weakened amid fluctuations. After opening today, overseas gold prices rebounded somewhat, with a gain of approximately 0.45% as of this writing. Market sentiment remains volatile. 1. On the policy front, the remarks made by Federal Reserve Chair nominee Warsh at his Senate confirmation hearing last night exerted some downward pressure on gold prices. Warsh stated that he is "committed to ensuring that the implementation of monetary policy remains strictly independent," emphasizing that interest rate decisions "must be strictly independent of political considerations," and pointing out that Trump never asked him to commit to rate cuts. The market interpreted this statement as a hawkish signal, coupled with his call for a "new inflation framework and communication method" from the Fed, further strengthening market expectations that monetary policy is unlikely to shift to easing in the short term, thus putting pressure on gold. 2. On the geopolitical front, a dramatic reversal occurred. Earlier today, Trump publicly stated that he did not intend to extend the ceasefire agreement between the US and Iran, which expires on the evening of the 22nd, and threatened to resume bombings against Iran after the ceasefire expires, triggering a rise in market risk aversion. However, hours later, Trump announced on social media that, at Pakistans request, he agreed to extend the ceasefire, pending Irans submission of a negotiating proposal. He also instructed the US military to continue its naval blockade of Iran and maintain a state of readiness. This fluctuating stance caused market sentiment to waver. 3. In summary, the obstruction of navigation in the Strait of Hormuz pushed up oil prices and inflation expectations, coupled with persistent expectations of Fed tightening, becoming the core factor suppressing gold prices. The US-Iran negotiations have been repeatedly uncertain, increasing short-term market divergence. Before the negotiations become clearer, traders are advised to control their positions and wait for confirmation of direction. However, given the current US stance of still favoring a negotiated solution, traders may consider buying on dips during periods of volatility.Market news: Japans finance minister will meet with the banking sector to discuss the threat posed by Anthropics Mythos model.On April 22, the highest 7-day annualized yield of Tencent Wealth Managements "Current Account +" was 1.3380%, and the lowest was 0.8440%. The highest 7-day annualized yield of WeChat Pays "Lingqian Tong" was 1.0670%, and the lowest was 1.0030%. The highest 7-day annualized yield of Alipays "Yuebao" was 1.1550%, and the lowest was 1.0000%.Boeing has begun formal certification testing of the engine anti-icing design repair for its 737 MAX series aircraft.Hong Kong-listed AI concept stocks fell in early trading, with Paradigm Intelligence (06682.HK) down 10.38%, Kingsoft Cloud (03896.HK) down 4.67%, and Qunhe Technology (00068.HK) down 2.54%.

As BoJ Udea Mentions the Appropriateness of Current Monetary Policy, EUR/JPY Exhibits a V-Shaped Movement

Daniel Rogers

Feb 24, 2023 14:30

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When Kazuo Ueda, the nominee for Governor of the Bank of Japan (BoJ), addresses the Japanese parliament, the EUR/JPY currency pair exhibits a V-shaped movement. The commentary of Haruhiko Kuroda's successor as Governor of the Bank of Japan has increased the volatility of the Japanese Yen.

 

As he describes the current monetary policy as appropriate and necessary to sustain 2% inflation, BoJ Ueda's speech appears more diplomatic. Moreover, he stated that rising import prices are the cause of Japan's rising inflation. Domestic demand is still insufficient, but the central bank is attempting to achieve pre-pandemic growth rates. The neighborhood has descended into lunacy as a result of his speech's absence of Yield conversion control (YCC) discussions.

 

Despite current discussions about the expansion of the YCC, the economic outlook for the Japanese Yen is positive, as the Bank of Japan is working to increase labor costs, which will confidently support a revival in overall demand.

 

Nordea economists continue to be optimistic about the Japanese Yen: "We remain fairly sanguine on JPY due to our expectations of a change in Bank of Japan monetary policy later this year." According to a note from Nordea, the time is ripe for a normalization of the Bank of Japan's stimulative monetary policy, "with inflation reaching its highest level in decades and a prognosis for higher wage growth."

 

Despite the easing of inflationary pressures, investors are concerned that the normalization of the Eurozone economy will take a significant amount of time. In order to maintain a ceiling on the price index, the European Central Bank (ECB) is anticipated to continue raising interest rates.


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