Japan's 10yr Yields Recorded Their Highest Year-over-Year Increase in December

The yen extended losses today, plunging to 146.42 before slightly correcting to 146.37. Markets expect Japan's central bank to begin its policy of phasing down negative rates in late 2023/early 2024. However, according to Bloomberg, BoJ is likely to keep its monetary stimulus benchmarks unchanged at a two-day policy meeting ending Dec. 19, despite recent market speculation that the negative rate may be revised as soon as the December meeting. BoJ officials view the potential cost of waiting for more information to confirm solid wage growth as not very high.

In the meantime, the Japanese yen is likely to keep bearish momentum as traders see, overall, very few signs of a reversal — be them purely technical, or macro/fundamental. Since the Asian currency retested the 146.32 level, next bearish momentum will be reconfirmed at the next Fibonacci isotherm at 154 yen per USD.