​EBC Markets Briefing | Yen overlooks BOJ meeting; gold prices crashed

The yen hovered around a two-year low at the start of trading in Asia on Thursday, pressured by a firmer dollar as markets watched for how the BOJ will balance price pressures against slowing growth.

The central bank kept its rates steady at 0.75% as expected, but noted that inflation risks now are tilted to the upside. The decision was split, with eight members of the nine-member board voting in favour of a hold.

On Wednesday, media reported that many local large companies had fully accepted their unions' pay-hike demands, which would mark the third year in a row that pay hikes have exceeded 5%.

Exports climbed 4.2% from a year earlier in February, marking a sharp slowdown after hitting an over-three-year high in January. A 25.1% jump in the value of semiconductor exports contributed to the gain.

Tokyo likely has less scope to intervene in the currency market than it did in the past, even the yen is edging towards 160 per dollar that was considered the trigger threshold ‌for authorities to act.

Currency intervention is said to be most effective when conducted to unwind huge speculative positions. But the exposures as of early March was much smaller than those in July 2024.

The yen was within an inch of the major psychological resistance. Without signs of a quick end to energy market stability, we see further losses towards the low around 162 per dollar hit in 2024.

Asset recap

As of market close on 18 March, among EBC major products, UK Brent Crude led gains. Qatar said that Iranian missile strikes had damaged a key LNG export facility following Tehran's threats to the Gulf countries.

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Gold dropped below $5,000 for the first time in a month amid rising fears of inflation that could derail the Fed's rate-cut path. Wholesale prices rose sharply in February, before the war broke out.

AbbVie shares plunged as the FDA's approval of Johnson & Johnson's novel plaque psoriasis medication, Icotyde. That will challenge Skyrizi which is key to AbbVie's growth strategy in the post-Humira era.

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