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Japans foreign exchange reserves stood at $1,359.4 billion in November, compared with $1,347.4 billion in the previous month.Microsoft (MSFT.O) announced on December 4th that it will raise the subscription price of its Office software for business and government customers on July 1, 2026.Japans total household spending fell 3.5% month-on-month in October, compared to a forecast of 0.7% and a previous reading of -0.7%.Japans household spending in October fell 2.9% year-on-year, compared to a forecast of 1% and a previous reading of 1.80%.On December 5th, analysts stated that Bank of Japan Governor Kazuo Uedas emphasis on inflation risks and the danger of a weak yen persuaded Prime Minister Sanae Takaichi to accept his plan to raise interest rates in December. Just last year, Takaichi publicly called a rate hike a "foolish move." This communication appears to have worked: both the market and the new Japanese government received the signal that a small 25 basis point rate hike to 0.75% later this month is almost certain, alleviating concerns that the Bank of Japan might succumb to political pressure and abandon its tightening policy. However, a more pressing issue remains: how will the Bank of Japan communicate its future rate hike path? This task is far more complex than a single rate hike, given the lack of consensus on a reasonable range for the neutral interest rate. Currently, a "fragile truce" exists between the central bank and the government, keeping the bond market tense. Investors are now focused on how Ueda will articulate the pace of subsequent rate hikes.

Gold Price Prediction: XAU / USD corrects to around $1,910 despite intensifying concerns of a global banking crisis

Alina Haynes

Mar 16, 2023 14:00

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After reaching a new six-week high at $1,937.39, the gold price (XAU/USD) displayed a corrective move during the Asian session. As gold's allure is extremely strong amid growing concerns about the global banking crisis, a correction in the precious metal appears to be short-lived. Credit Suisse's debacle following the failure of Silicon Valley Bank (SVB) has triggered the risk of global financial instability, and uncertainty over the Federal Reserve's (Fed) upcoming interest rate decision has bolstered the case for the Gold price.

 

S&P500 futures have shown a recovery move following Wednesday's sell-off as investors assess the banking sector's uncertainty. However, the motif of risk aversion has not yet completely subsided.

 

During the Asian session, the US Dollar Index (DXY) is fluctuating in a narrow range of around 104.60. It appears that the impact of banking sector turmoil is maturing for the USD Index, and investors are beginning to discount expectations for next week's monetary policy. According to the CME FedWatch instrument, the probability that Fed chair Jerome Powell will raise interest rates by 25 basis points (bps) has risen above 70%. While 30% of the probabilities support maintaining the current interest rate policy.

 

Increasing odds of a status quo monetary policy are supported by a declining Consumer Price Index (CPI), a rising Unemployment Rate, sluggish Retail Sales, and a declining Producer Price Index (PPI).


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