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Japan's economy grew at an annualized rate of 0.9% in the third quarter, surpassing the 0.7% consensus estimate, though it slowed from a revised 2.2% in the previous quarter. This growth supports the Bank of Japan's case for continuing rate hikes and alleviates pressure on the government as it prepares fiscal stimulus measures.
Asia-Pacific markets are set to rebound following comments from U.S. Federal Reserve Chair Jerome Powell, who indicated a cautious approach to lowering interest rates amid strong economic growth. Investors in the region are focused on upcoming economic data from Japan and China, including Japan's GDP and China's retail sales and industrial output figures. Meanwhile, U.S. markets experienced declines, with the Dow Jones falling 0.47% and Tesla shares dropping 5.8%, reflecting a cooling of the so-called "Trump trades."
Asian equities are poised for gains as traders adjust their expectations for a Federal Reserve rate cut next month, impacting US stocks and bolstering the dollar. Australian shares saw modest increases, while Japanese and Hong Kong futures rose, supported by a weaker yen and a strengthening greenback. In early Asian trading, US equity futures dipped slightly.
AUD/USD has sharply declined, nearing its August low of $0.6349, while minor resistance is noted at $0.6476 and $0.6513. In contrast, EUR/JPY remains above last week's low of ¥163.22 but below the 200-day SMA at ¥164.85, with the October peak at ¥166.68 in sight. USD/JPY continues to rally, targeting the late May high of ¥157.70, with support at ¥154.71 and ¥153.88.
IG
The US Treasury has added South Korea to its foreign-exchange monitoring list, which already includes Japan and Germany, while criticizing China's lack of transparency in currency management. In its latest report, the Treasury found that no major US trading partner manipulated exchange rates to gain unfair trade advantages.
Canada is piloting an incentive program to combat antimicrobial resistance (AMR), with other nations like the UK and Japan exploring similar initiatives. Experts emphasize the need for a unified scientific approach to address AMR, highlighting the importance of prevention, regulation, and understanding community needs to ensure effective antibiotic use and animal health. Access to antibiotics is improving in low- and middle-income countries, but these regions are becoming hotspots for AMR, necessitating urgent action.
The US dollar has gained significant strength post-election, with the DXY index rising for seven consecutive weeks and up 6% since October. The EURUSD has dropped to around 1.05, while USDJPY approaches 156, raising concerns among officials. Despite the dollar's current overvaluation, uncertainties remain regarding the funding of President-elect Trump's policies, which could impact economic stability. Adjusted forecasts predict USDJPY will trend lower over the next year, while EURUSD is expected to fluctuate between 1.05 and 1.12.
UBS has raised its USD/JPY forecast, projecting the currency pair to reach 155 by December 2024, with a potential near-term surge to 160 if U.S. 10-year yields rise significantly. However, they anticipate downward pressure in 2025 due to expected Fed rate cuts and other economic factors, ultimately targeting 145 by year-end 2025. Investors are advised to consider selling USD/JPY if it approaches 160.
India is projected to surpass Japan in GDP rankings by 2025, with the IMF forecasting a 7% growth for India in 2024 and 6.5% in 2025. In contrast, Japan's growth is expected to be just 0.3% in 2024. India's robust economic expansion, driven by strong domestic demand, saw a remarkable 7.8% growth in the first quarter of 2023, making it the fastest-growing major economy.
Japan’s largest banks have raised their annual profit forecasts to record levels, driven by increased lending income and gains from share sales. Mitsubishi UFJ Financial Group Inc. now anticipates a net income of ¥1.75 trillion ($11 billion) for the fiscal year ending March 31, up from ¥1.5 trillion, following a 36% surge in first-half profit to ¥1.3 trillion.
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