In the outgoing week, Bitcoin updated an all-time high, approaching a price of $110K and dragging the entire crypto market up with it. On Friday morning, capitalisation is moving up again, settling above $3.63 trillion. The market needs time to adjust to the current highs, and so far, there are more signs that this is a pause before further growth rather than the market hitting impenetrable resistance.

That said, the sentiment index has been cruising in the greed zone, only going to extreme greed once. As was the case in mid-December, high sentiment index values intensified the selling.

Bitcoin fell below $100K during the week, then approached $110K before gently re-emerging at 102K. The selling intensified on the approach to the peak of $110K in December and in January.

However, support has also shifted above $100K, meaning market participants are now getting used to a six-figure price. Additionally, the market continues to bounce around mentions of Bitcoin and cryptocurrency reserves by Washington officials, which adds volatility but doesn’t help with direction.

News Background

If investors of all categories, from private to institutional, decide to allocate between 2% and 5% of their portfolios to the first cryptocurrency, its value could reach the $700,000 mark, BlackRock CEO Larry Fink said.

Goldman Sachs CEO David Solomon commented that Bitcoin does not threaten the dollar’s status as a reserve currency, remaining a speculative asset. From a regulatory perspective, he said, the bank still cannot own and transact in the first cryptocurrency.

Trading in XRP and SOL futures on the CME could begin on 10 February if approved by regulators. Such information appeared on a subdomain of the CME Group platform. A spokesperson for the exchange said that the beta version of the website was in the public domain ‘by mistake,’ and no decision has yet been made to launch the contracts.

Investment firm Bitwise has filed an application to register the Dogecoin-based ETF (DOGE) with the Delaware (US) Department of State’s Division of Corporations. Decrypt notes that asset managers typically register legal entities with the state before filing formal applications with the SEC.

Member of the US House of Representatives Gerald Connolly called for an investigation into possible conflicts of interest in connection with cryptocurrency projects of Donald Trump. In his opinion, it potentially violates ethical norms and creates risks to national security.

Source: ACTIONFOREX

Source：asia fund managers

The BoJ also forecast underlying inflation to remain at or above its 2% inflation target over the medium term, in our opinion a strong signal of further tightening to come. Comments from Governor Ueda also leaned hawkish, as he said the current policy rate is still far from its “neutral” level, and that he was not considering some specific rate level as a barrier.

Against this backdrop, we continue to forecast a 25 bps rate hike to 0.75% at the BoJ’s April announcement. We now also forecast a final 25 bps rate increase to 1.00% in July, while acknowledging that the timing of that final rate hike could get pushed back depending on how local and global economic conditions evolve. Overall, we think the outlook for Bank of Japan tightening and eventual Fed easing could lead to a reasonably resilient yen through 2025, with more sustained and substantial yen weakness perhaps more likely in 2026 as the U.S. economy recovers.

Bank Of Japan Takes A Further Step Along Its Monetary Policy Normalization Path

In a widely expected decision, the Bank of Japan (BoJ) took another step along its monetary policy normalization path at this week’s meeting, raising its policy rate by 25 bps to 0.50%. In raising interest rates, the BoJ said growth and inflation have been developing generally in line with its forecasts, and also cited reasons for a firming in wage and price trends. The BoJ said:

There have been many views expressed by firms stating that they will continue to raise wages steadily in this year’s annual spring labor-management wage negotiations; and

With wages continuing to rise, there has been an increase in moves to reflect higher costs, such as increased personnel expenses and distribution costs, in selling prices.

The Bank of Japan also noted relative stability in global financial markets, saying “while attention has been drawn to various uncertainties, global financial and capital markets have been stable on the whole, as overseas economies have followed a moderate growth path.”

The Bank of Japan’s encouraging assessment of recent economic trends was also reinforced by upward revisions to its economic outlook. While the forecasts for GDP growth were little changed, there were some notable upward revisions to the central bank’s inflation forecasts. CPI ex-fresh food inflation is forecast at 2.7% for FY2024 (previously 2.5%), 2.4% for FY2025 (previously 1.9%) and 2.0% for FY2026 (previously 1.9%). In a similar vein, the outlook for CPI ex-fresh food and energy inflation was revised higher to 2.2% for FY 2024 (previously 2.0%), 2.1% for FY2025 (previously 1.9%) and 2.1% for FY2026 (unchanged). The forecast for Japan’s underlying inflation to remain at or above the central bank’s 2% inflation target over the medium term is, in our opinion, a strong signal of further tightening to come. The Bank of Japan indicated as much in its monetary policy announcement, saying that:

Given that real interest rates are at significantly low levels, if the outlook for economic activity and prices presented in the January Outlook Report will be realized, the Bank will accordingly continue to raise the policy interest rate and adjust the degree of monetary accommodation.

Hawkish Comments Hint at a Higher Terminal Policy Rate

In addition to the Bank of Japan’s announcement, in our view, comments from Governor Ueda also point to multiple further rate hikes from the Bank of Japan over the balance of 2025. Ueda said he expected solid results from this year’s spring wage negotiations, a development we think would be supportive of another rate increase in April. Ueda also suggested global markets have been relatively calm in the initial days of President Trump’s administration. Interestingly, Ueda also said that even after this week’s rate increase, the current policy rate is still far from its “neutral” level, and that he was not considering some specific rate level as a barrier. He indicated that one BoJ analysis suggested the neutral rate could be somewhere between 1.00% and 2.50%. So long as overall economic trends remain encouraging, we view those comments as consistent with the BoJ eventually raising its policy rate to 1.00%, perhaps by its July announcement.

Regarding recent economic trends, labor cash earnings rose 3.0% year-over-year in November and expectations for this year’s spring wage talks are upbeat. Inflation also remains elevated, with CPI ex-fresh food inflation at 3.0% year-over-year in December. Sentiment surveys, most notably the Tankan survey, have generally improved in recent quarters, consistent with steadier economic growth ahead. While these encouraging economic trends remain in place, and with global economic conditions perhaps more benign during the early part of this year as the U.S. economy advances at a steady pace and with Fed policy on hold, we view these conditions as most conducive for further Bank of Japan rate hikes. Against this backdrop, we continue to forecast a 25 bps rate hike to 0.75% at the BoJ’s April announcement. We now also forecast a final 25 bps rate increase to 1.00% in July, while acknowledging that the timing of that final rate hike could get pushed back depending on how local and global economic conditions evolve. Overall, we think the outlook for Bank of Japan tightening and eventual Fed easing could lead to a reasonably resilient yen through 2025, with more sustained and substantial yen weakness perhaps more likely in 2026 as the U.S. economy recovers.

Source: ACTIONFOREX

Source:scmp

Sales of previously owned homes in the US rose for the third straight month in December, entering 2025 with some momentum after the worst year in nearly three decades.

Contract closings of existing homes last month increased 2.2% to an annualised rate of 4.24 million, the most since February, according to National Association of Realtors data released on Friday. That was in line with the estimate of economists surveyed by Bloomberg.

The third straight pickup in monthly sales — the longest streak since late 2021, when mortgage rates were less than half of where they are now — signals that homeowners and buyers alike have come to terms with borrowing costs around 7%. The new-home market also appears to be stabilising, providing some early signs of optimism for the new year.

“Home sales in the final months of the year showed solid recovery despite elevated mortgage rates,” NAR chief economist Lawrence Yun said in a prepared statement.

However, for all of 2024, sales reached the lowest since 1995, when the US had about 70 million fewer people. It marked the third straight annual decline, stretches only ever seen in the 2006 housing crisis as well as the recessions around the early 1980s and 1990s.

“The prospects for this year look better, but not by much as the triple threat of high mortgage rates, high home prices and low supply will continue,” Robert Frick, corporate economist at Navy Federal Credit Union, said by email.

The median sale price, meantime, climbed 6% over the past 12 months to US$404,400 (RM1.8 million), reflecting more sales activity in the upper end of the market. That helped propel prices for the entire year to a record.

After slowly creeping up for months, inventory dropped 13.5% in December from the prior month — which is typical at the end of the year. It’s still up 16.2% from December 2023.

Fed cuts

There was hope that 2024 could be a turning point for the housing market as the Federal Reserve started cutting interest rates. But mortgage rates track government bond yields, which rose nearly a full percentage point towards the end of the year after inflation proved stubborn, fueling concerns that officials eased policy too soon. They’re expected to keep rates steady at next week’s meeting.

Treasury yields are still elevated as investors brace for the cost of President Donald Trump’s policies and price pressures are cooling only somewhat. That’s projected to keep mortgage rates on average above 6% through at least 2027, according to some estimates.

In December, 53% of homes sold were on the market for less than a month, unchanged from November, while 16% sold for above the list price. Properties stayed on the market for 35 days on average, compared with 32 days in the previous month. 

Existing-home sales account for the majority of the US total and are calculated when a contract closes. The government will release figures on new-home sales on Monday.

Separate data on Friday showed US business activity cooled this month on a slowdown in services, while consumer sentiment declined due to concerns about unemployment and potential tariffs’ impact on inflation.

Source: Theedgemarkets

Source：asia fund managers