Bank of Japan gets more backing for tighter monetary policy

While industrial production declined 0.9% in November, month on month, shifting from a 1.3% growth in the previous month, it was better than estimates of a 1.6% drop. It was the first contraction since August. Then retail sales accelerated for the first time in three months, rising 5.3% in November YoY, exceeding the market forecast of 5% and the 21st straight month of expansion in Japanese retail sales.

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Bank of Japan may soon need to make an important policy move

Recent data from Japan suggests that the country's central bank, the Bank of Japan, may need to consider raising interest rates or tightening its loose monetary policy. Industrial production in Japan decreased by 0.9% in November, which is a decline compared to the 1.3% growth seen the previous month. While this was the first contraction in a few months, it was actually still better than what experts had predicted. On the other hand, retail sales in Japan showed positive growth, with a 5.3% increase in November compared to the previous year. This exceeded market expectations and marked the 21st consecutive month of expansion. These figures play a crucial role in determining what the Bank of Japan will decide regarding interest rates in their upcoming meetings.

Yen rises in value

This shift in Japan's economic indicators has caused the value of the Japanese yen to go up compared to the US dollar. The dollar has been continuously losing value against the yen, reaching a support line at 140.73 yen. This support line represents a 76.4% retracement from the low points the dollar experienced in July. Previously, the dollar had reached its highest point against the yen in several years. However, money has been flowing out of the dollar since then and into the yen, which has caused the yen to strengthen. Many experts in the foreign exchange market predict that the price target for the yen will be 137.25, which was the lowest point it reached in July.

To take advantage of this trend, it is recommended to wait for a candle to close below the 140.73 support line before making any adjustments to short stop-loss positions. This will help secure profits when trading the Japanese yen. It is also advisable to regularly modify stop-loss positions to lock in profits as the yen continues to strengthen. By being proactive and staying updated on the latest market trends, traders can make informed decisions and benefit from the current situation.