MAS Holds Monetary Policy Steady as Strong Growth Raises Inflation Risks 
New York Fed President John Williams Signals Rate Hold as Economy Seen Strong in 2026 
Stock Futures Dip as Investors Await Key Payrolls Data 
BOJ Holds Interest Rates Steady, Upgrades Growth and Inflation Outlook for Japan 
U.S. Banks Report Strong Q4 Profits Amid Investment Banking Surge 
U.S. Urges Japan on Monetary Policy as Yen Volatility Raises Market Concerns 
US Futures Rise as Investors Eye Earnings, Inflation Data, and Wildfire Impacts 
Fed May Resume Rate Hikes: BofA Analysts Outline Key Scenarios 
Bank of Korea Expected to Hold Interest Rates as Weak Won Limits Policy Easing 
US Gas Market Poised for Supercycle: Bernstein Analysts 
Moody's Upgrades Argentina's Credit Rating Amid Economic Reforms 
Lithium Market Poised for Recovery Amid Supply Cuts and Rising Demand 
Hitoshi Suzuki, the member of the Bank of Japan’s policy board, pointed out over the weekend that the central bank could adjust its current yield curve control strategy as soon as inflation was moving towards its 2% target. This morning the comments of some analysts now point towards this meaning that the BoJ may be planning to start exiting from its expansionary monetary policy soon. Really? Anyone taking a look at inflation developments in Japan recently immediately realizes how pointless this comment is. The underlying price trend stands at only just above zero.
In view of this disappointing price trend, even the BoJ had to once again revise its inflation outlook to the downside recently so that if anything it has moved away further from a normalization of monetary policy again.
However, some now argue that the BoJ might tighten its monetary policy before inflation has reached its target. Of course, everything is possible. But in its forward guidance, the BoJ points out that it would stick to its expansionary monetary policy until inflation has even risen above its 2% target.
In its view, this is the only way it can finally overcome the long period of low inflation rates in Japan. It is doubtless that as a result, the BoJ is, therefore, furthest away from normalizing its monetary policy amongst all G10 central banks. Sorry to mention, dear JPY bulls! Courtesy: Commerzbank
With little new information at hand, we keep our trade recommendations unchanged. The dollar lost its upward momentum as select high profile drivers of support stalled. However, cyclical conditions are still strong in the US and USD positioning is modestly short ahead of the first FOMC in a year to possibly deliver higher “dots”. Thus, we encourage staying modestly long the dollar vs. CHF and JPY but shorts in near run.
Implied correlations between yen-crosses are rich for a benign post-Japanese election environment bereft of idiosyncratic yen risks; sell USDJPY vs. CHFJPY correlation swaps hedged with USDJPY FVAs.
