Asian stocks look set for a positive open, with Nikkei +1.35%, ASX +0.87% and KOSPI +1.05% at the time of writing, as the bounce in big tech overnight paves the way for risk-on sentiments to reignite. The Nikkei continues to hover around its multi-decade high, flirting with the key 36,000 level in today’s session which will serve as immediate resistance to reclaim. The Hang Seng Index (HSI) may attempt to stabilise after its 6% sell-off this week, but broad sentiments may remain subdued.
This morning’s economic calendar saw further easing in Japan’s December inflation to its lowest level since June 2022, which gives the Bank of Japan (BoJ) room to exercise more patience and to stand pat on policies at the upcoming meeting. The positive wage-inflation and sustainable 2% inflation conditions for a BoJ policy pivot are still largely on the lookout. The BoJ Governor Kazuo Ueda did acknowledge last month that prices and wages appeared to be moving in the right direction, but he mentioned that conditions remained uncertain, seemingly calling for more time to assess that the pricing and wage trend will stick.
Widening US-Japan bond yield differentials have driven a recovery in the USD/JPY lately, with the pair reversing back above its Ichimoku cloud on the daily chart while its daily relative strength index (RSI) reclaimed its 50 level for the first time since November 2023. Further upmove could leave the 150.00 level of resistance on watch, where the BoJ has intervened in October 2022 with aggressive yen-buying. On the downside, the 146.50 level may serve as immediate support to hold, where the upper edge of the cloud stands.