BOJ raises its growth forecast for its first meeting in 2020
The Bank of Japan announced this morning its decision on monetary policy at its first meeting in 2020, which contributed mainly to the Japanese yen's gains, after it sent a spirit of optimism in the hearts of investors regarding the stability of local economic conditions in the coming period. The bank raised its forecast for economic growth in 2019 from 0.6% to 0.8%, in 2020 from 0.7% to 0.9%, and in 2021 from 1.0% to 1.1%.
But despite lowering his forecasts for inflation growth in the coming period affected by the sales tax hike, which had severe repercussions on household spending, the bank has hinted at the possibility of tightening monetary policy if the economy shows any signs of recovery in the upcoming meetings. The yen fell to the level of 109.87, and it is expected that it will continue to decline in the coming period for several reasons, most notably:
- The Olympic Games, scheduled to be received by Tokyo in the middle of the year, are expected to support economic growth as tourist numbers rise.
The initial documented trade agreement that the United States of America reached with China that will support the export growth on which the Japanese economy depends in the first place.
Tangible recovery in the Chinese economy and emerging economies in general.
As for gold prices, they retreated from their highs at $ 1567 an ounce, to return within the cross-range again between the level of 1540/65 dollars per ounce in the medium term. But we have to take into account the markets ’willingness to start Trump’s accountability today before the Senate and anticipate the markets for the Democrats’ statements, even if in the end the vote was voted in favor of the majority by the Republicans to keep Trump in office, these statements may somewhat affect the gold and support its rise especially if it breaches the level $ 1567 an ounce.
Also, it should be noted that there is a state of uncertainty in the markets with the announcement of 200 infected people in China as a result of an unidentified virus, especially with the country's preparation for the Lunar New Year.
And markets are watching the British labor market data, which if it came in less than expected, will weigh on the trading of sterling, which was already affected over the past period by disappointing data. In the evening, the Canadian Manufacturing Sales data is scheduled to be announced during the month of November, which is expected to continue to decline by 0.5% to weigh on the Canadian dollar trading, and therefore the Canadian dollar may continue to rise, especially with the breach of the resistance range 1.3090.
Regarding the major indices markets, the continuation of the RSI index below the 50 level in the Dow Jones makes our bearish corrective view continue to 29130 levels. The German DAX may continue to decline with the negative divergence of the MACD indicator to the 13370 level.