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Long-term interest rates in developed countries are falling.

UK CPI fell -0.2% month-on-month and 3.9% year-on-year, well below expectations of 0.1% and 4.4% respectively.

The Fed’s mention of a possible interest rate cut phase put downward pressure on interest rates worldwide, but the UK CPI fell very quickly. German PPI also came in at -0.5% month-on-month, well below the -0.3% forecast, and the German 10-year interest rate has finally fallen below 2.0%.

Looking at the CPI declines in the US, Europe and the UK, will there be a race to cut interest rates next year? In this situation, the BOJ would be the only central bank to tighten, and in this sense, the yen may be more likely to strengthen. The trade deficit announced today was better than expected but relatively large. The path to a weaker yen is alive and well. The interest rate differential will narrow, but the trade balance may prevent the yen from appreciating.

In this context, the Central Bank of Turkey raised its policy rate by 2.5% to 42.5%. The market reaction was not very strong. The statement said that the Bank “came considerably closer to the necessary monetary tightening” and “expects to complete the monetary tightening cycle as soon as possible”, suggesting that the newly raised rate of 42.5% will almost end the tightening cycle.

The Turkish lira’s reaction has been limited. That it will not fall significantly, Even if it did not rise, The fact that it has not fallen significantly can be interpreted as a positive sign for higher interest rates, even if they do not rise.

The USD/JPY has been sold since yesterday’s New York close. From around 143.70 yen at the close of New York, it has already fallen by about 1 yen.
The US dollar has already fallen by about 1 yen from around 143.70 yen at the close of New York. US stocks also fell sharply on profit-taking selling, This may have also had an impact.

Yesterday’s consumer price index in the UK considerably lower, but it is not clear that inflation is subsiding globally. inflation is subsiding globally. global inflation is subsiding. As it is, If global inflation subsides, interest rates around the world will fall, the US dollar will have room to move lower. On the other hand, The yen is in a place where it cannot ease further, The yen, on the other hand, is in a place where it cannot ease further, so it is expected to strengthen relative to the dollar.

Will next year be a year of dollar weakness? If so, at the end and beginning of the year The possibility of a preemptive move will emerge.