Dutch semiconductor manufacturing equipment giant ASML Holding stated on December 2 regarding the new round of advanced semiconductor export restrictions imposed by the US government on China: "The impact on performance is within expectations." and pointed out: "We focus on global semiconductor demand, not specific regions, and will not be affected by the new restrictions."
Asml Holding maintains the original targets unchanged, with expected sales of up to 35 billion euros for the fiscal year 2025, and up to 60 billion euros for the fiscal year 2030.
　　
On December 2, the USA government announced new measures restricting the supply of cutting-edge semiconductors and high-performance semiconductor manufacturing equipment for artificial intelligence (AI) to mainland China. In addition to adding 140 mainland Chinese companies to the "entity list" effectively banning transactions, the scope of restrictions on exporting advanced products to mainland China has been expanded to include South Korea, Taiwan, Malaysia, and others.
  　　
As the Netherlands is following the USA in imposing export restrictions on China, it is therefore not affected by the newly added restrictions in this instance.
   　　
Asml Holding is the only global company that produces the most advanced 'extreme ultraviolet (EUV)' lithography equipment required for mass production of semiconductors. EUV lithography equipment is subject to export restrictions from the Netherlands, but deep ultraviolet (DUV) lithography equipment, except for some, is not restricted.

On November 29th, in the Tokyo foreign exchange market, the yen appreciated to 149 yen against the US dollar. This is the level of yen appreciation against the US dollar in nearly a month since late October. The year-on-year increase in the November Consumer Price Index (CPI) released on the morning of November 29th exceeded market expectations. In the market, there is an increased expectation of a rate hike by the Bank of Japan, the interest rate spread between Japan and the USA has narrowed, and investors are buying yen and selling dollars.

In mid-November, the yen rate once fell to around 156 yen. As the market generally believed that the victorious Trump would introduce policies that would exacerbate inflation in the USA, and hence realized that the pace of interest rate cuts in the USA would slow down, as part of the 'Trump trade', many sold yen and bought dollars. After this round of trading, the yen experienced a rebound.

The United States entered holiday mode starting from Thanksgiving on November 28th. The liquidity of trading decreases, and price fluctuations become more intense. Daizuo Ueno, the Chief Forex Strategist at Mitsubishi UFJ Morgan Stanley Securities, pointed out: "The retracement of Trump's trades coincided with the adjustments in positions before and after Thanksgiving, accelerating the strengthening of the Japanese yen and the weakening of the US dollar."

Bank of Japan Governor Kazuo Ueda stated on November 21st that they will "obtain more data" before the next meeting in December. The market generally believes that the CPI data for Tokyo will drive further interest rate hikes at the December meeting.

Key points for December's FX investment strategy
- Although the USD/JPY rose to 156 yen in November, it fell below 150 yen towards the end of the month.
- After Mr. Trump's victory in the highly anticipated US presidential election, the expectation of "US interest rate increase = USD appreciation" was widespread, but why did it quickly hit a deadlock?
Based on the suggestion of the 52-week moving average, there is a possibility that the US dollar will continue to weaken and the yen will strengthen even after December. With that in mind, the expected range for USD/JPY in December is 145-152 yen (please refer to the forecast for the first week).

[Washington=Keita Ikeda, Jerusalem=Toshiyuki Fukushima] U.S. President-elect Trump posted on his own social media on the 2nd, demanding the release of hostages abducted in Israel by the Islamist organization Hamas, which continues to fight with Israel in the Gaza Strip until his inauguration in January next year. He warned that if they do not comply, they will face "all the wrath of hell."
After winning the November presidential election, it is the first time Mr. Trump has publicly commented on the Gaza hostages. Mr. Trump pointed out that the hostages are being detained "violently, inhumanely, and against the will of the entire world," and demanded, "The responsible parties will suffer a blow greater than anyone in the long history of the USA. Release the hostages immediately!"
He criticized the lack of action accompanying hostage release negotiations between the parties, but did not mention specific measures towards progress. During the election campaign, Mr. Trump appealed for an early end to the fighting in Gaza.
Mr. Trump's post was made a few hours after the Israeli government announced the death of an American-Israeli man. Hamas on November 30 took another American-Israeli man as a hostage...

In the Tokyo forex market on the 3rd day, the yen exchange rate has weakened slightly, with 1 US dollar = 149 yen, in the latter half of the range. Recognizing that the Japan-US interest rate differential is shrinking, the movement of buying yen and selling dollars has paused, with actions to repurchase dollars taking precedence.
Marito Ueda, Director of Financial Market Research at SBI Liquidity Market, stated that despite the yen being bought due to the safe-haven risk of political turmoil in France, as well as Japan's further interest rate hike and the gradual rate cuts in the United States, it will be difficult to continue selling dollars and buying yen if employment statistics confirm strong performance in the US economy.
The yen against the dollar fell by 4 cents to 149.64 yen at the New York close, as of 8:42 am on October 2nd, briefly rising to 149.08 yen in overseas markets.
Nomura Securities' Chief Forex Strategist, Yujiro Goto, stated in a report on March 3 that due to dovish comments by Federal Reserve Board Director Woller, expectations of a rate cut in December have resumed, causing the USD/JPY to fall. Although the expectations of a rate hike by the Bank of Japan have subsided, the upside potential for the USD and JPY may be limited until the currency policy decision in December.
Fed Governor Woller stated on the 2nd that he is inclined to support a policy rate cut at this month's Federal Open Market Committee (FOMC) meeting. The market is open to a rate cut.

The Tokyo stock market is expected to continue rising on the 3rd. The November manufacturing composite purchasing managers' index released by the Institute for Supply Management (ISM) exceeded market expectations, leading to increased risk appetite among investors. The Philadelphia Semiconductor Index (SOX) was high in the US market, and related stocks are likely to be bought in Japan as well.
The settlement price of the Nikkei Stock Average futures (denominated in yen) on the Chicago Mercantile Exchange (CME) was 38,615 yen, which is 145 yen higher than the regular trading closing price on the Osaka Exchange (38,470 yen). The US S&P 500 stock index and Nasdaq Composite Index reached record highs - with the yield on the 10-year US Treasury rising to around 4.2%, up 2 basis points.

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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