The USD/JPY saw a rise today following a speech by Bank of Japan Deputy Governor Shinichi Uchida, in which he emphasized the importance of maintaining easy monetary policy and indicated that the BOJ is unlikely to aggressively raise interest rates, even after ending its negative interest rate policy. China’s inflation data for January was also a focus, with the CPI falling year-on-year at the fastest pace since the global financial crisis, signaling deflation. However, certain data, like core inflation and the month-on-month headline, saw gains despite this. This has raised concerns about real rates in China, especially with the Loan Prime Rates remaining relatively high.
Chinese stocks continued to rebound as the Lunar New Year holiday approached, with markets in China closed on Friday, February 19 and set to reopen the following Monday. Additionally, Hong Kong and Singapore markets will also have brief closures as part of the holiday celebrations. The CSI 300 Index, which tracks the performance of the top 300 stocks listed on the Shanghai Stock Exchange and the Shenzhen Stock Exchange, is considered a benchmark for China’s A-share market. It includes the largest and most liquid A-share stocks across various sectors, making it a widely used benchmark for fund managers and investors in China’s stock market. However, the latest inflation data and potential impact on real rates have raised concerns about the market’s future performance.