Recently, the US dollar index and the Bank of Japan's policy shift have attracted a lot of attention in the market. According to the report, the Bank of Japan announced that it will reduce the scale of bond purchases from 2024, which is another major decision after the previous hint of an exit from the negative interest rate policy. The shift is seen as a major turning point in Japan's 30-year history, marking a shift in its monetary policy from a long-term super-QE to monetary normalization.
This decision by the Bank of Japan means a reduction in money supply, which for Japan is equivalent to a tightening policy. Although Japan's CPI has come out of deflation, its level is still not high, indicating that Japan is not in a hurry to tighten measures. This move will likely push the yen higher, which will put pressure on the dollar. In fact, the yen has risen by more than 10% against the dollar, making it the brightest performer among non-US currencies.
At the same time, the dollar index hit new lows and is now close to falling below the round number mark of 100. This trend is likely to continue, especially against the backdrop of a possible US rate cut next year. The market is generally optimistic, and global money seems to be flowing into the United States.
In addition, other markets around the world have also seen a positive reaction. U.S. stocks have continued to rise sharply, with only 3 days in the past 30 trading days. At the same time, the likes of these safe-haven assets are continuing, reflecting the market's preference for these safe-haven assets.
The Bank of Japan's policy shift and the US dollar index's ** reflect the significant changes that global financial markets are experiencing. These changes are likely to have far-reaching implications for the global economy, especially in terms of monetary policy and investment flows.