Yen surged! Expectations of interest rate hikes heating up, Japanese stocks under pressure.

With the heating up expectations of interest rate hikes, the yen has recently surged significantly, and Japanese stocks are facing sustained pressure. The Nikkei 225 index experienced a short-term dive, now down 0.37%.

Impressive Japanese economic data:

In the third quarter, commodity capital expenditures increased by 0.8%, with software investment growth reaching 8.1%.

Tokyo's core CPI rose by 2.2% year-on-year in November, higher than expected and previous value, indicating that inflationary pressures still exist.

Is a rate hike approaching?

Bank of Japan Governor Kuroda Haruhiko clearly stated that a rate hike is imminent, with a 61% probability of a rate hike in December and a 71% probability of a rate hike in January 2025.

The interest rate futures market is very sensitive to rate hike expectations. The USD/JPY exchange rate rebounded in early trading, with the yen sharply strengthening, and the exchange rate against the US dollar briefly broke through the 150 mark.

How should investors respond? With the backdrop of rate hikes and a stronger yen, Japanese stocks may face more pressure. Investors need to closely monitor the policy dynamics of the Bank of Japan, as well as changes in economic data, adjust investment strategies promptly, and seize possible market opportunities!

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