Japan: Main items of interest for 2018 - Nomura

Ivan Delgado Independent Analyst

According to Nomura's Economics Team, in the early stages of 2018, the focus will be on BOJ policy, with no changes in the main scenario expected, adding that upside risks associated with spring labor negotiations and growth strategies exist.

Key Quotes

Decisions about next BOJ governor and deputy governors: in our main scenario Mr Kuroda is reappointed

Normalizing monetary policy: low probability of hike to 10-year yield target

Government declaration that deflation has been overcome: little political benefit in such a declaration

Spring wage negotiations: forecasting base pay hike of around 0.5%; upside risk of 1% hike

Consumption tax hike: expect yet another postponement; focus on relationship with constitutional reform and general elections

Government growth strategies: focus on whether any policies promote greater labor market liquidity

Share prices in more developed markets: any correction likely to prove temporary; watching economy in 2018 H2

Inflation in more developed economies: baseline scenario for stagnant prices; acceleration could affect financial markets

Financial regulation in China: major impact if regulation of wealth management products leads to credit crunch

US midterm elections: under risk scenario pressure could mount for Japan to reduce trade surplus with US

European elections: low probability of Italian elections spurring a new euro crisis

Author

Ivan Delgado

Independent Analyst

Established in the Asian continent since 2009, Ivan studied a degree in Business at the University Pompeu Fabra (Barcelona), while also earning a postgraduate degree in Business Administration.

AUD/USD remains depressed near 0.6950 after RBA minutes

AUD/USD attracts follow-through selling during Tuesday’s Asian session, looking to extend the overnight rejection slide from 0.7000, or a two-week top, following the release of RBA meeting Minutes. The US Dollar retains a bullish undertone near its highest level since April 2025 as energy-driven inflation risks keep December Fed rate hike bets firmly on the table. Adding to this, geopolitical risks further underpin the safe-haven USD.

USD/JPY extends retreat below 158.50 as intervention risks loom

USD/JPY is dropping below 158.50 in the Asian session on Tuesday, snapping a two-day winning streak and pulling back from an over two-week top touched the previous day, despite Japan's soft PPI inflation print. Bulls turn cautious amid speculation that authorities will step in to prop up the Japanese Yen, which, in turn, weighs on the pair.

Gold comes under pressure near $4,160

Gold now gives away its initial gains and resumes its decline, revisiting the $4,160 region per troy ounce on Monday. The yellow metal’s pullback comes despite the fresh downward trend in the Greenback in combination with a mixed performance of US Treasury yields across the board and easing tensions on the geopolitical front.

Bitcoin rebounds despite cautious sentiment

Bitcoin rebounds over 2%, trading above $83,500 on Tuesday, recovering the previous day’s losses. Persistent geopolitical tensions and mixed signals continue to weigh on risk appetite, keeping investors cautious despite BTC’s recovery.

US – Midterm update: Democratic lead holds three weeks before election

With three weeks until the US midterm election on 3 November, prediction markets are more or less unchanged. Polymarket continues to put the probability of a Democratic sweep at 60-65%. The House is seen as a fairly safe Democratic win, with a probability of around 90%.

Has Bitcoin really escaped the macro forces it was built to fight?

Over 17 years ago, Satoshi Nakamoto designed Bitcoin (BTC) on the back of a global financial crisis as an alternative to the global monetary system outside the control of central banks, governments and traditional intermediaries. This raises a key question: has Bitcoin really become independent of the macroeconomic forces it was built to challenge?