Japan Service PMI Defines Yen Rumos Today at 9:30

[Igor Pereira]

Traders and investors, maximum attention to opening the Asian session. We have a high volatility event scheduled for tonight that can dictate the pace of the exchange market for the rest of the week.

By Igor Pereira

Japan will disclose data from MIP Services Today. Adjust your watches:

• Disclosure Time: 21:30 (Hour of Brasilia)

This is not just another economic indicator. It's a decisive week. As I have been warning in our analysis of the "Japanese Risk", the Bank of Japan (BoJ) is about to hold its monetary policy meeting on December 19.

The financial market already warrants an aggressive (above 90%) probability that BoJ will increase interest rates in 0.25%, raising the basic rate to 0.75%. Tonight's dice works as the "final proof" for that decision.

Reading the PMI (Index of Purchase Managers) will serve as a direct thermometer of Japanese economic health. Here's the reaction matrix for your trades:

1. Scenario A: High MIP (above 50 or Above Expectation)

   • Interpretation: It signals a heated and resilient economy.

   • Impact on BoJ: It gives the Central Bank "white letter" to raise interest aggressively on Thursday.

   • Market reaction: Immediate strengthening of the yen. Expect sharp falls in pairs USD/JPY and EUR/JPY (sale movement in these pairs).

2. Scenario B: Low PMI (Under Expectation)

   • Interpretation: The service sector is contracting or slowing down.

   • Impact on BoJ: It creates doubt and hesitation among the members of the bank. It can signal a postponement of interest increase or a smoother tone ( dovish ).

   • Market reaction: The yen weakens. That would cause a high-pitched sneezing USD/JPY, bringing temporary relief for global risk assets.

ExpertFX Recommendation

Global liquidity by Wednesday morning will be dictated by this number. The volatility in the pair USD/JPY should increase significantly around 9:30.

I recommend caution with positions open at this time. If the data is strong, disassembly of positions of Carry Trade You can speed it up.

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