Morning Briefing: BoJ Raises Rates, Yen Weakens (18.09.2026)
Macroeconomics
The Bank of Japan (BoJ) has raised interest rates by 25 basis points to 1.25%, marking a 31-year high. This decision was made with a 7-2 vote, where dissenting members Toichiro Asada and Ayano Sato expressed concerns about the sustainability of Japan's economic recovery and the appropriateness of the rate hike given that inflation remains below the 2% target.
In other economic news, Moody's has upgraded India's FY2027 GDP growth forecast to 7.0%, citing the resilience of the Indian economy amidst tensions in the Middle East. Additionally, Barclays analysts predict that the Bank of England will increase interest rates by 25 basis points in both November and February 2027.
Commodities
Gold and silver prices are on the rise, supported by declining US Treasury bond yields. Reports from the Financial Times indicate that Venezuela is nearing a significant agreement to transfer $4 billion in gold reserves to New York. Meanwhile, WTI crude oil prices are consolidating below $96.30 per barrel, influenced by ongoing geopolitical unrest in the Middle East, although prices have decreased from earlier highs above $100.
Copper is also seeing a weekly gain due to renewed demand from key buyers in China, which has countered the recent hawkish stance from the US Federal Reserve. Current prices at 07:14 show gold at 4,366 (up 0.56%), silver at 66.21 (up 1.65%), WTI crude at 96.36 (down 0.18%), and copper at 14,476 (up 1.89%).
Currencies
The Japanese yen has depreciated sharply following the BoJ's decision, reaching its highest level since early September at around 157.20. This decline is attributed to profit-taking by foreign exchange investors, adhering to the "buy the rumor, sell the fact" strategy. The dissent among BoJ board members has also contributed to a weakened hawkish tone, leading to gains in GBPJPY and AUDJPY pairs.
The euro is strengthening towards 1.1500, benefiting from slight US dollar weakness, while the dollar index remains stable above 100.00 points. The Swiss franc has gained for two consecutive days, driven by increasing downward pressure on US Treasury yields. Current exchange rates at 07:14 include EURUSD at 1.1485, USDJPY at 157.23, and USDCHF at 0.8237.
Stocks and Indices
US index futures are showing low volatility following a rebound after the Fed's decision. The Nikkei 225 in Japan is rising, largely due to a strong rebound in semiconductor maker SK Hynix. Shares of the Japanese platform Mercari are experiencing increased volatility due to restrictions on Pokémon card listings. In the US, the FCC has approved foreign capital involvement in the media merger between Paramount and Warner.
Cryptocurrencies
The broader cryptocurrency market has opened positively, with Bitcoin trading at $77,300 and Ethereum approaching $2,473. Uniswap and Zcash are leading in daily and weekly gains, with Uniswap up nearly 10% daily and 29% weekly, while Zcash has increased by over 4% today and 29% weekly. Current prices at 07:14 show Bitcoin at 77,394 and Ethereum at 2,485.
Geopolitics
In geopolitical developments, Pakistan's army chief has called on Iranian authorities to pressure Houthi militants to de-escalate tensions in the Middle East. A UN report has indicated potential war crimes by US forces in Iran, which has been officially rejected by Washington. Additionally, Russian aviation has conducted missile strikes targeting logistics infrastructure in Ukraine.
Suggested to Watch
Investors should closely monitor the USDJPY currency pair, as the BoJ's rate hike has led to a paradoxical yen sell-off. The rate is testing key resistance around 157.20, which could lead to increased volatility in other yen pairs. Zcash is currently in an overbought phase, suggesting careful monitoring for potential corrections. Uniswap continues to show strong bullish momentum, while silver is reacting positively to falling US bond yields.