Japanese inflation accelerates, complicating BoJ’s rate decision amid global uncertainty

Economic

Central Bank

Summary:

Japan’s core inflation accelerated in March, yet economic uncertainty will limit the Bank of Japan’s ability to continue hiking rates in the near term. With inflation seen accelerating further, a BoJ tightening is likely in July.

Fresh food prices eased, yet inflationary pressures broadened in March

Consumer inflation in Japan edged down to 3.6% year on year in March (vs 3.7% in February and market consensus) as fresh food prices stabilized modestly. Yet core inflation, excluding fresh food, accelerated to 3.2% (vs 3.0% in February) and core-core inflation, excluding fresh food and energy, also accelerated to a 2.9% pace (vs 2.6% in February). Both were in line with market consensus.

On a monthly basis, inflation rebounded 0.3% month on month, seasonally adjusted, in March (vs -0.1% in February) with both goods and services rising 0.2% each. Fresh food prices declined for a second month, yet the earlier pickup in costs is now passing on to other manufactured food prices and services, such as eating out.

April Tokyo CPI inflation data will be released on Friday. Prices are set to accelerate even faster than in March. This will also complicate the BoJ’s rate decision in the near term as trade war risks increase.

Core inflation picked up in March

Japanese inflation accelerates, complicating BoJ’s rate decision amid global uncertainty_1

BoJ watch

Downside risks to GDP are growing significantly even as inflation is accelerating. Also, Japanese yen trends are being closely watched by the US administration. We dropped our long-held May rate hike call last week, pushing it to July. We expect the BoJ to keep its policy rate unchanged at its May meeting even though inflation is still the key concern. The BoJ is likely to focus on economic uncertainty for now, just like many other central banks. The BoJ will base rate decisions on what happens with concessions made between the US and Japan and where the US tariffs policies go from here. We believe that by July, things will be clearer. Trade concessions will likely take shape by then, giving the BoJ more confidence to raise its policy rate in July. The BoJ's rate hike pace will be quite gradual. For now, we still pencil in two hikes next year -- in April and October 2026.

Source:ING

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Thomas

Cryptocurrency

Trump's Return Initiates Crypto Market Shakeup

Donald Trump’s return to the White House in January 2025 has coincided with a $760 billion loss in crypto market value, with significant strategic policy shifts announced from Washington.

Trump's return marks a pivotal moment for cryptocurrency markets, driven by strategic policy implementations resulting in immediate market volatility. Investors are reacting to the significant economic and regulatory shifts.

Policy Shifts and Market Reactions

Trump's return to power in early 2025 brought substantial changes in U.S. crypto policy. The government announced the creation of a Strategic Bitcoin Reserve, managed by the Treasury, aiming to facilitate a federal digital asset stockpile.

"The working group will move forward on facilitating the strategic federal purchases of Bitcoin, Ethereum, XRP, Solana, and ADA." — Donald J. Trump, President of the United States

With the establishment of a digital asset stockpile, led by David Sacks, the U.S. is navigating new regulatory landscapes. The Treasury's role has expanded to include managing cryptocurrencies seized in criminal activities, marking a policy shift.

Impact on Crypto Markets

The policy changes have triggered a sharp decline in crypto market capitalization, wiping out $760 billion. Bitcoin prices experienced notable fluctuations with a decline from an all-time high to substantial lows. Regulatory actions led to the dissolution of certain enforcement activities, creating further market uncertainty.

The financial landscape is experiencing turbulence, impacting crypto holders and markets globally. The number of Bitcoin millionaire addresses fell, indicative of a shift in investor confidence post-policy implementation. Volatile market conditions continue to pose challenges.

Strategic Changes and Future Considerations

Trump's policy actions reflect a significant departure from his earlier anti-crypto stance, focusing on national strategic reserves. Despite the optimistic economic assertions, markets responded negatively. Further analysis considers potential long-term regulatory impacts on market stability.

In response to reduced enforcement, the crypto market has yet to stabilize fully, suggesting potential challenges for governmental regulation and market resilience. The evolution of these strategic initiatives remains a focal point for economists and investors alike.

The content on The CCPress is provided for informational purposes only and should not be considered financial or investment advice. Cryptocurrency investments carry inherent risks. Please consult a qualified financial advisor before making any investment decisions.

Source: CryptoSlate

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Damon

Economic

Trump's Economic Policies and Their Impact on Cryptocurrency Markets

In recent months, President Trump's economic strategies have garnered significant attention, particularly concerning their implications for inflation and the broader financial markets. As traders and investors navigate these turbulent waters, the cryptocurrency market has not remained untouched.

Trump's declaration of a national emergency aimed at increasing the U.S.'s competitive edge has sparked discussions about the future of economic policies and their direct impact on inflation. With inflation rates being a pivotal concern for both traditional and digital asset investors, the relationship between Trump's policies and cryptocurrency valuations is becoming increasingly relevant.

Moreover, Trump's advocacy for preemptive rate cuts amidst claims of low inflation has raised eyebrows among crypto traders. These rate cuts could potentially lead to a more favorable environment for cryptocurrencies, as lower interest rates often drive investors towards riskier assets.

As the economic landscape evolves, trader sentiment is heavily influenced by the news emanating from the White House. Understanding the interplay between Trump's economic decisions and the cryptocurrency market is crucial for investors looking to navigate this complex environment.

Source: CryptoSlate

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Warren Takunda

Economic

Stocks

Asian equities and U.S. stock futures slid on Monday as anxiety over tariffs and criticism of the Federal Reserve by President Donald Trump shook investor confidence, pushing the dollar sharply lower and catapulting safe-haven gold to a record high.

Trump launched a scathing attack against Fed Chair Jerome Powell on Thursday, with his team evaluating whether they could fire Powell, a move that would cast doubts about the central bank's independence and further erode faith in U.S. assets.

Most markets were closed on Friday and some, including most of Europe, remained on holiday for Easter Monday, leading to thin liquidity.

S&P 500 futures fell 0.75% and Nasdaq futures slid 0.8%. In Asia, Japan's Nikkei and Taiwan's benchmark index were down more than 1% but Chinese stocks inched higher.

"Markets are already on edge due to escalating geopolitical tensions, and now concerns are rising that Trump's potential interference with the Fed could add another layer of uncertainty," said Charu Chanana, chief investment strategist at Saxo in Singapore.

"Any signs of political pressure on monetary policy could undermine the Fed’s independence and complicate the path ahead for interest rates just as investors are looking for stability amid global volatility."

Trump's tariffs have roiled financial markets and triggered a selloff in Treasuries and the dollar in April that stoked doubt in the long-held belief in the safe-haven status of U.S. assets.

The drop in confidence in U.S. assets has been exacerbated by Trump's attacks on the Fed and Powell through last week.

The relentless selling in the dollar led euro to a three-year high on Monday, while the yen hit a seven-month peak. The Swiss franc strengthened to its highest against the dollar in over 10 years.

Chicago Federal Reserve President Austan Goolsbee said on Sunday that he hopes the United States is not moving to an environment where the ability of the central bank to set monetary policy independent of political pressure is questioned.

The Fed's credibility as the world's most powerful central bank rests largely on its historic independence to act free from political influence.

The yield on the benchmark U.S. 10-year Treasury note rose 3.5 basis points in Asian hours.

The two-year yield, which typically moves in step with interest rate expectations, was down 3.6 bps as traders weighed the possibility of rate cuts following pressure from Trump.

U.S. EARNINGS IN FOCUS

With the U.S. earnings season kicking off, investor focus this week will be on results from tech bellwether Alphabet, chipmaker Intel and EV maker Tesla.

All the 'Magnificent Seven' megacap stocks are sharply lower in 2025, with Alphabet down about 20% and Tesla off 40%.

Companies and investors are grappling with a tariff landscape that is likely to keep shifting as the Trump administration negotiates with countries.

While Trump has paused some of the heftiest levies on imports, the U.S. is also locked in a trade battle with China, the world's second-largest economy.

Early April data from South Korea showed a sharp fall in exports, suggesting U.S. tariffs are starting to hit the global economy harder. South Korea and the United States are due to hold trade talks this week.

Trump said on Friday the U.S. is having good conversations privately with China amid the two countries' trade war. But China's ambassador to the United States has said the U.S. should show respect before any talks can take place.

In commodities, gold prices rose more than 1% to touch a record high of $3,370.17 per ounce, taking its gains so far this year to 26%. The metal has been consistently hitting record highs this year, buoyed by safe-haven flows.

Oil prices fell on Monday after nuclear talks between the United States and Iran showed progress, easing concerns that the dispute will reduce supply from the major Middle Eastern producer.

Brent crude futures fell 1.75% to $66.77 a barrel. U.S. West Texas Intermediate crude was at $63.55 per barrel, also down 1.75%.

Bitcoin prices touched its highest level since April 2 and was last up 2.89% at $87,515.88.

Source: Reuters

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Michelle

Commodity

Stocks

Shares of major gold mining companies, including Newmont (NYSE: NEM), Barrick Gold (NYSE: NYSE:GOLD), Agnico Eagle Mines (NYSE: NYSE:AEM), Kinross Gold (NYSE: NYSE:KGC), AngloGold Ashanti (NYSE: AU) climbed 3% following a surge in gold prices to a record high, driven by a combination of US dollar weakness, criticism of the Federal Reserve, and ongoing trade war concerns.

Gold’s rally, which saw bullion surpassing $3,400 an ounce, came amidst the US currency falling to its lowest point since late 2023. The market’s move was further influenced by President Donald Trump’s consideration of firing Fed Chair Jerome Powell and advocating for lower interest rates. These developments have raised concerns over the independence of the Federal Reserve and potential politicization of US monetary policy.

The precious metal has experienced a significant uptrend this year as the trade conflict between the US and China has led to market uncertainty and a shift towards safer investments. The appetite for risk assets has weakened, while demand for havens has grown, as evidenced by a 12-week increase in holdings of bullion-backed exchange-traded funds—the longest such streak since 2022. Additionally, central banks have been accumulating gold in their reserves, contributing to strong global demand.

Amid these market conditions, banks have revised their outlook on gold, with some, like Goldman Sachs Group Inc (NYSE:GS)., predicting the metal could reach $4,000 by the middle of next year.

Source: Investing

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Warren Takunda

Economic

The Pound to Dollar exchange rate climbed to new six-month highs to open the new week and could be set to rise further, although there is now a significant technical resistance level looming almost immediately overhead of the market, which could temper the rally somewhat in the days ahead.

GBP/USD rose to almost 1.33 last week and then climbed further near to 1.34 in the Asia session overnight on Monday when it appeared on course for a 10th day of appreciation or recovery, bringing it within reach of 1.3427 and the 78.6% Fibonacci retracement of the June 2021 to September 2022 downtrend.

Temperance here could slow the rally somewhat, however, with the Dollar remaining on the back foot and fundamentals continuing to lean against the currency, any corrective setbacks for Sterling might be shallow and short-lived, with the nearest support levels found around 1.3233 and 1.3134 thereafter.

“We flipped our Dollar view a few weeks ago, based in large part on tariffs and other US policy shifts raising uncertainty and impairing sentiment in the US and likely weighing on US firms’ profits and US households’ real income,” says Kamakshya Trivedi, head of global FX strategy, at Goldman Sachs, in a Thursday commentary. Pound to Dollar Week Ahead Forecast: Buoyant but Resistance Looms_1

Pound to Dollar Week Ahead Forecast: Buoyant but Resistance Looms_1

Above: GBP/USD at daily intervals with Fibonacci retracements and selected moving averages highlighting possible areas of support. Click for closer inspection.

“The thesis for further upside in [GBP/USD] remains intact, with Sterling benefiting from the broader strength in the European FX complex we expect this year, as well as from the lower vulnerability of the UK economy to the US tariff shock. In light of the domestic risks though, we do not see a compelling case for positioning for sustained Sterling upside versus other European currencies for [now],” he adds.

The White House campaign against Federal Reserve Chairman Jerome Powell, its tariff policy, the imperial optics around its trade dispute with China and the evolving response from Beijing all imply that any stabilisation of the Dollar might also be somewhat short-lived this week.

The greenback has come under broad pressure alongside US equity markets since the eruption of the trade conflict between Washington and Beijing, which has also placed the quasi-pegged Renminbi under strain, leading the ICE Dollar Index to its largest loss since November 2022 over the week heading into Passover.

“John Authers at Bloomberg just ran a piece titled ‘This Passover, Everyone Has Questions’. His annual tradition of asking four questions, as in that ancient ceremony, didn’t start with the obvious one: “Why is this market different from all other markets?” But when the 30-year Japanese bond can fall 11bps on the day, most traditional takes on what is going on look, well, ‘unleavened,’” says Michael Every, a global strategist at Rabobank, in market commentary last Wednesday.

Pound to Dollar Week Ahead Forecast: Buoyant but Resistance Looms_2

Above: GBP/USD at weekly intervals with Fibonacci retracements highlighting possible areas of technical resistance. Click for closer inspection.

“To the answer: this market is different from all other markets because in all other markets we assume there is one global economy within which all goods, services, and capital flow, with one single global reserve currency, the US dollar. Now, we might be witnessing an Exodus from it,” he adds.

The Dollar decline through the April 12 to 20 Holy Week has evoked use of Exodus as a metaphor for what appears to be happening with the currency. Exodus describes the escape of some of the earliest Israelites from Egypt in chapters 12 to 20 of the Old Testament book bearing the same name, a story in which Moses receives commandments and the details of a covenant while sojourning on a mountain.

Economists at TS Lombard have a different way of explaining the market rout, however, seeing instead a destruction of capital brought about through the impact they expect White House trade and tariff policy to have on the so-called supply capacity of the US economy and this might not be entirely an academic mythology.

This is because the tariffs will reduce the supply, or otherwise raise the cost, of necessary and desired things in the US for a time at least, which matters because demand and supply are akin to the debit and the credit of a transaction, the liability and the equity around an asset and perhaps also, the yang and ying, all of which make up alternate sides of what is effectively the same coin in each instance.

Source: Poundsterlinglive

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Warren Takunda

Economic

When the world’s finance ministers and central bank governors gather at the International Monetary Fund in Washington this week, it may kindle memories of another meeting, also held against the backdrop of a global economic crisis, in autumn 2008.

Then, as the aftershocks from the collapse of Lehman Brothers ripped through financial markets, central banks coordinated drastic emergency rate cuts, and the UK chancellor, Alistair Darling, urged his G7 counterparts to emulate the UK’s approach and shore up stricken banks.

Policy mistakes, including lax financial regulation, were partly to blame back in 2008 – but as this week’s IMF and World Bank spring meetings convene, the chaos confronting key decision-makers in the global economy has been entirely manufactured in the White House.

Donald Trump’s arbitrary “reciprocal” tariffs have been paused for 90 days, with many governments hoping they will never be reinstated. But the 10% across-the-board levy that remains in place – alongside eye-watering increases in tariffs on the US’s great geopolitical rival, China – still represents a historic shock to the global trading system.

UK government has declined to criticise the White House, negotiating furiously in the hope the tariffs will be lifted

The IMF, like just about every other credible economic forecaster, is likely to use its latest World Economic Outlook on Tuesday to warn of the hit to growth. The Fund’s managing director, Kristalina Georgieva, has already suggested the policy poses “a significant risk to the global outlook”.

Given the nature of the crisis, however, a united front, akin to that assembled in 2008, will be impossible.

Instead, different G7 economies are all trying to manage Trump’s administration in their own way. The UK government has declined to criticise the White House openly, and is clinging to the shreds of the “special relationship” – negotiating furiously in the hope the tariffs will be lifted.

The EU, facing a 20% levy if the full tariffs are reintroduced, plans to retaliate. Mark Carney, the former Bank of England governor now leading Canada, is taking an aggressive, “elbows up” approach, as he calls it, warning voters in the looming election that the relationship between the two nations is irrevocably damaged.

This cacophonous response is part of the chaos Trump appeared to relish unleashing when he brandished his tariffs scorecard in the White House rose garden earlier this month.

It is hard to imagine anything but the most anodyne statement being agreed by G7 finance ministers, a group that will include Trump’s treasury secretary, the former hedge fund manager Scott Bessent. As a foretaste of Bessent’s likely approach to his counterparts, he used a meeting with the Spanish economy minister, Carlos Cuerpo, to attack Madrid for failing to spend enough on defence.

And as central bankers consider the outlook for wobbly bond markets and the potential risks to financial stability, meanwhile the independence of Federal Reserve chair, Jay Powell, long a target of Trump’s criticism, appears less than secure. Given the importance of the dollar’s role, the Fed has previously been at the heart of efforts to safeguard the global financial system. It is unclear to what extent they would be ready to play the same role in a future crisis.

Gordon Brown, who was central to the global response to the 2008 crash, has called for a “coalition of the willing” to deepen trade ties between countries outside the US and protect the world’s poorest countries from the impact of the policy.

In the past, the G7 has sometimes been the locus for such collective action. But this week’s meeting is happening less than a mile from the White House, where Trump’s trade policy is continuing to evolve, one blustering press conference at a time.

Multilateral institutions, such as the IMF and its development-focused sister the World Bank, are also likely to be targets of the Trump administration’s determination to rip up the current world order, and cut funding for any institution that fails to put “America first”.

It remains to be seen whether any of the global policymakers assembling in Washington are willing to set out an alternative vision to Trump’s – but even if they don’t, the clash between the US and the rest of the world will be on clear display; and, as in 2008, the omens for the global economy look bleak.