USD/JPY: 2023 Review and 2024 Forecast

According to statistics, USD/JPY (US Dollar/Japanese Yen) is among the top three most traded currency pairs in the Forex market. This is facilitated by the pair's high liquidity, which ensures narrow spreads and favourable trading conditions. This means that traders can enter and exit positions with minimal costs. Additionally, the pair exhibits very high volatility, providing excellent profit opportunities, particularly in short-term and medium-term operations.

Monday's Focus Will Be on Inflation Data

In Switzerland, we get inflation numbers for December. The past months, inflation has surprised to the downside both compared to the SNB's forecast and consensus expectation with headline and core now within the SNBS's target range. Today's print will prove important as to whether the SNB will opt for a rate cut soon, possibly already in March.

GBP/USD Shrugs After Mixed UK Data

UK retail sales jumped 1.3% in November m/m, bouncing back from 0% in October and beating the consensus estimate of 0.4%. This was the sharpest pace of growth since January and the increase was felt in all sub-sectors. Yearly, retail sales edged up 0.1%, after a downwardly revised decline of 2.5% in October and above the market consensus of -1.3%.

Canadian Dollar Powers Higher, GDP Next

The Canadian dollar is showing limited movement on Friday. In the European session, USD/CAD is trading at 1.3276, down 0.05%. We could see stronger movement in the North American session, with the release of Canada’s GDP and the US PCE Price Index.

Solana and Bitcoin Failing to Storm Milestone

Bitcoin is once again pulling back down after touching the $44.4K level, having retreated to $43.7K by the start of active trading in Europe. Horizontal resistance has been effectively holding back the bulls for the past three weeks. On the other hand, the price dips are getting shallower, keeping the longer-term bullish trend in place.

Yen Steady as Japanese Inflation Dips

Japan’s Core CPI, which excludes fresh fuel but includes fuel costs, dropped to 2.5% in November, matching the consensus estimate. This was down from the October gain of 2.9% and marked the lowest reading since July 2022. Still, it was the twentieth consecutive month that the core rate has exceeded the Bank of Japan’s target of 2%. The headline figure dropped to 2.8%, down from 3.3% in October.

Canada's Economy Flatlined Again in October, Likely Advanced in November

The Canadian economy registered a third consecutive month of effectively no growth on a month-on-month (m/m) basis in October. This print comes in below Statistics Canada's advanced guidance and market expectations for a 0.2% m/m gain. The flash estimate for November points to a modest gain of 0.1% m/m.

Week Ahead – Markets Wind Down for Holidays, Mind the Liquidity Gap

Another devastating year for the Japanese currency is coming to an end. Despite mounting a comeback in recent months, the yen is still on track to close the year with losses of around 8% against the US dollar, mostly because of the Bank of Japan’s refusal to raise interest rates.

The Weekly Bottom Line: A Healthy Dose of Holiday Cheer’

Even though this was the darkest week of the year, with yesterday marking the winter solstice, we received several positive reports on the economy showing signs of a thawing housing market, slowing inflation, and resilient consumers. Financial markets picked up where they left off last week, with yields falling and equities rising. At time of writing, the S&P 500 is up 1.0% on the week while the two-year Treasury declined by 14 basis-points (bps) to 4.32%.

USD/JPY Yawns after BoJ CPI Slips

Japanese inflation indicators have been heading lower. Last week, Core CPI, which excludes fresh food but includes fuel costs, dropped in November from 2.9% to 2.5%. On Tuesday, the Bank of Japan’s Core CPI index followed suit and declined to 2.7% in November, down from 3.0% in October.