Japan’s Economy Is Not There Where the BoJ Would Like It to Be

Japanese Inflation Is Still Far From Target

Overnight, before the Tokyo opening bell, we received the Japanese data on its CPI and employment. In terms of inflation, before the release, there was no forecast available on the headline number. The previous figure was sat at +0.8%, whereas the new data had disappointed, as it came out at +0.3%. But it wasn’t so bad for the core CPI, which came out in line with expectations at +0.9%. Nevertheless, this is still lower by a tenth of a percent on a YoY basis from the previous number. We have to mention that the Bank of Japan’s, so-called “Price Stability Target” sits at +2.0%. Given that the Japanese inflation is still quite low, it might take a while, until the BoJ’s target could be reached.

Nikkei 225 — Technical Outlook

The Nikkei 225 has ended the year below the opening price but managed to remain above the psychological 20000 barrier. Looking at our Nikkei 225 cash index daily chart, it has now dropped back below the 20000 mark. Our oscillators suggest that the index is quite oversold and could be ready for a bit of more correction to the upside. Overall, Nikkei 225 is on a downslope, trading below a short-term downside resistance line taken from the peak of the 1stof October. For now, we will stay put, but keep an eye on one of our key breakout levels.

NZD/JPY — technical Outlook

After moving sharply lower the previous week, NZD/JPY has been trading sideways this week, between the 74.05 and the 74.95 levels. Because the downside momentum had eased off a bit, we will shift our views of the short-term outlook to a more cautiously bearish and wait for a break of one of the above-mentioned levels. Overall, the pair is still trading below its short-term downside resistance line, taken from the high of the 4thof December, which favours a slightly bearish scenario.

AS FOR THE REST OF TODAY’S EVENTS

The economic calendar doesn’t look very busy. That’s no surprise, given that we are in our last days of 2018.

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