Market Highlight 23.01.2026

The Bank of Japan is expected to keep interest rates unchanged at its January policy meeting on Friday noon, maintaining its cautious view that the economy will continue to recover at a moderate pace - supporting the case for further rate hikes at some point in 2026. BOJ Governor Kazuo Ueda is unlikely to provide strong guidance on the timing of the next move, as the decision has become more complicated by market volatility triggered by Prime Minister Sanae Takaichi’s announcement of a snap election next month. The BOJ is facing a delicate balancing act: it must curb renewed selling pressure on the JPY through a firmer policy tone, while avoiding a further rise in bond yields amid expectations of aggressive fiscal spending by Japan’s Government. Last month, the BOJ raised its policy rate to 0,75%, the highest level in 30 years. Markets will closely watch Governor Ueda’s post-meeting remarks for his assessment of the JPY’s recent weakness - which has pushed up import costs and headline inflation - and how these dynamics could affect the pace and timing of future rate increases.

U.S Personal Consumption Expenditures (PCE) data - an inflation gauge closely monitored by the FED - released last night showed consumer spending rose strongly in October and November (+0,5%), potentially keeping the world’s largest economy on track for a third consecutive quarter of solid growth. The USD Index fell -0,53% yesterday as tensions over Greenland temporarily eased.

The USD/VND interbank exchange rate edged higher yesterday, reaching an intraday peak of 26.280 before closing the afternoon session at 26.270. The market is expected to remain stable within the 26.250 - 26.300 range during this weekend’s final trading session.

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