📈 Will Nikkei225 finally trade above the 40,000 level again?

• This week, the Nikkei225 futures crossed above the 39,000 level for the first time in three weeks, and is currently sitting just 1.3% shy of the key 40,000 level - a level unseen since 18 July 2024.

• A Jiji Press report yesterday said that inside the Bank of Japan (BoJ), the view is growing that a premature rate increase should be avoided unless there’s a big risk of consumer prices rising on factors such as a weakening yen.

• This view is in contrast to BOJ Governor Kazuo Ueda’s remarks in an interview with Nikkei that rate hikes were “nearing” as inflation and economic trends develop in line with the central bank’s forecasts.

• Overnight index swaps are now pricing in a 40% chance of a rate hike at the Dec 18-19 BoJ meeting, falling sharply from the 60% odds priced at the end of November. (Bloomberg)

• The dollar-yen fell back below the key 150 level on falling expectations of a rate hike, while Japanese stocks may have received a boost

• Investors will be paying close attention to BoJ board member Toyoaki Nakamura’s speech and press conference today for any further hints on monetary policy and the dollar-yen’s path from here.

• Those expecting the Nikkei225 to gyrate to Nakamura's speech later this morning may wish to consider Nikkei225 warrants which tend to move in greater percentages than the index

• As an example, Macquarie Warrants Malaysia’s focus call warrants NIKKEI-CJ and NIKKEI-CK have gained 27.8% and 31.1% in price respectively, (as of 1020AM this morning) following the Nikkei225 December futures' +3.8% gain this month to date. Meanwhile, focus put warrants NIKKEI-HH and NIKKEI-HI have dropped 27.6% and 25% in price, respectively, this month-to-date, since put warrants move inversely from the underlying.

‼️ Our focus warrants have up to 5mil units placed at the bid and ask, providing investors with high liquidity to enter and exit positions with relative ease.

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