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Japanese Stock Market:

• Nikkei 225 Index drops 0.06%, while Topix Index gains 0.18% in mixed trade.
• Japanese shares show uncertainty ahead of key policy decisions from major central banks.
• Manufacturing activity contracts, services activity slows in July.

Currency and BOJ’s Monetary Policy:

• Japanese yen weakens to two-week low, reaching over 141 per dollar.
• Bank of Japan expected to maintain ultra-low interest rates despite tightening expectations from other central banks.
• BOJ Governor Kazuo Ueda reaffirms commitment to ultra-easy monetary policy to achieve 2% inflation target.
• Japan’s annual headline and core inflation rates accelerate to 3.3% in June, remaining above the BOJ’s target.

Japanese Government Bonds:

• Japan’s 10-year government bond yield steadies below 0.5%.
• Dovish BOJ outlook keeps benchmark yield below upper target range.
• Falling bond yields in major economies alleviate upward pressure on JGB yields.
• Easing inflationary pressures raise hopes for the end of current monetary tightening cycle.

Technical Perspective

2 Weeks Ago

The Nikkei Futures are currently exhibiting a balanced behavior around the Year’s upper value extreme on the daily interval, with traders relying on the extremes to determine rotational scenarios. There are slight indications of a bullish bias, suggesting a potential target towards the swing highs of the mentioned bracket area. Additionally, the lower extreme may be revisited, offering an opportunity to add to core long positions.

Based on the volume profile, we can observe a close with a balanced-shaped structure, indicating that traders could utilize the extremes of the distribution to determine rotational scenarios.

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