Very Important Person: Mr. Uchida [Foreign Currency Trading Diary 11]
Hello! This is Yuki, currently on summer vacation from life. It's finally Friday for everyone!🌸
Thank you as always for all the likes!
Today's article is a continuation of the previous one, covering the trading status for Wednesday, 7/23 Part 2!
(Click here for the previous article!)
If you haven't read it yet, I would be happy if you could take a quick look at the previous article!
Let's get started right away.
Here is today's starting lineup.
Review of the previous article
As always, I'll start with a review of the previous article.
In the previous article, as the trading status for Wednesday, 7/23 Part 1, we covered the relationship between stock prices and exchange rates.
The flow was:
Noticing the significant rise in the Nikkei Stock Average
→
Learning the relationship: rising stock prices = yen depreciation (foreign currency appreciation), falling stock prices = yen appreciation (foreign currency depreciation)
→
Purchased 30,000 yen worth of US dollars.
That was the flow up to around 8:00 AM on Wednesday, 7/23.
An important announcement?
After purchasing US dollars and tapping around on X again, I learned that there was a major event coming up after this.
It seems that Bank of Japan Deputy Governor Uchida is scheduled to give a lecture at 10:30, and I learned that depending on the content of this announcement, there could be significant price fluctuations in the dollar-yen pair.
As shown in the tweet in the image above, among Mr. Uchida's remarks, it says, “If there are any remarks that suggest a rate hike, it will likely trigger a reaction of buying the yen.”
It seems like there is an important hint hidden here for me, as I am dealing with US dollars, but since I don't quite understand it with just this, I asked Chappy.
Please take a quick look.
Q, Bank of Japan Deputy Governor Uchida is scheduled to give a lecture today. “If there are any remarks that suggest an early additional rate hike, it will likely trigger a reaction of buying the yen.” What does this mean? Will the yen get stronger? Or will it get weaker?
A, you noticed a very good point. This is a bit complicated, but to put it simply, it is highly likely to lead to a “stronger yen.” I will explain the reason👇
⸻
💡 Why the yen gets stronger when the “Bank of Japan raises interest rates”
1. When the Bank of Japan suggests a rate hike
• People holding Japanese yen previously thought, “It’s not attractive because there is almost no interest.”
• But if “interest rates in Japan also rise,” then,
👉 Expectations rise that holding assets in yen will earn interest.
👉 Overseas investors will start selling dollars and euros to buy yen.
2. Buying yen = Stronger yen
• More people want yen (Demand ↑) → The value of the yen rises (Stronger yen)
• On the other hand, more people sell dollars → Weaker dollar
⸻
🧭 So what is the meaning of this news?
✅ **“If there are remarks that suggest an early additional rate hike”**
→ Yen buying progresses, and the dollar-yen pair falls (towards a stronger yen)
✅ Conversely, if there are dovish remarks such as “there will be no rate hike for a while”
→ The yen is easily sold, and it tends to move towards a weaker yen.
⸻
🔄 The relationship between the dollar-yen and the Nikkei Stock Average also matters here
By the way, when the dollar-yen moves, the Nikkei Stock Average is also affected👇
(Continued)
✅ Summary
• Deputy Governor Uchida suggests a rate hike → Towards a stronger yen (Dollar-yen falls)
• If he says they are not in a hurry to raise rates → Towards a weaker yen (Dollar-yen rises)
In other words, depending on the content of the lecture, the yen-converted value of your dollar time deposit is also highly likely to change.
That was the answer I received.
In short, if the Bank of Japan suggests a rate hike, more people will want to buy Japanese yen = it will lead to a stronger yen (weaker foreign currency).
Conversely, if things stay as they are, the yen, which doesn't have a very good interest rate even if you hold it, will be sold, and it is expected to lead to a weaker yen.
For me right now, since I have 30,000 yen worth of US dollars that I just bought, I am in a situation where I really want it to move towards a weaker yen and a stronger foreign currency.
In other words, I don't want them to raise interest rates! Bank of Japan, please.
Result
It reached 10:30 and the lecture began.
I thought it would be streamed on DAZN or U-NEXT, but it wasn't (there's no way it would be).
There was no stream on YouTube either.
However, around 10:30, a PDF of the lecture content was posted on X by the Bank of Japan.
I looked through it myself, but since it lacked accuracy, I waited a few minutes for the reactions of those more knowledgeable, and it turned out that the announcement was to the effect that they wouldnot implementa rate hike at this time.
Please take a look at the image below.
The announcement was made at 10:30.
Perhaps because the policy was not to raise rates, the dollar-yen pair moved towardyen depreciationfor a few hours afterward, as expected.
However, it was not a very large change, and the dollar-yen price soon fell.
One important point here is that although the Bank of Japan will not raise rates immediately, they also stated the following:
Given that the current real interest rate is at an extremely low level, if the main scenario for the economy and prices is realized, we believe that we will continue to raise the policy interest rate and adjust the degree of monetary easing in accordance with the improvement in economic and price conditions.
In other words, it is suggested thata rate hike in the futurewill be implemented if Japan becomes economically and politically stable.
Also, this article touches on the content of Mr. Uchida's lecture this time, and it is expected thata future of yen appreciationwill arrive, even if not immediately. (It was written in detail and I learned a lot from it)
I don't know what constitutes stability, but I feel that everything depends on the movements of Prime Minister Ishiba.
In the future, it seems necessary to keep a close eye onthe Bank of Japan's reactionsalong with political and stock market trends.
Conclusion
Well, this article has become a bitvoluminousbut what do you think?
Over these past two days, I have learned that I must use stock prices and the Bank of Japan as references to succeed in foreign exchange trading.
I am happy that I am starting to feel like knowledge is accumulating within me.
Well, it has been a long post, so I will wrap things up here for today.
I will see you in tomorrow's article. Please just leave a like❣️
いいなと思ったら応援しよう！
いただいたチップが溜まったら生成AIの有料版を買ってみたい☁️この記事が参加している募集
この記事は noteマネー にピックアップされました
