The financial markets were in a state of flux on Friday as the Bank of Japan (BOJ) made the decision to hold its benchmark interest rate steady at 0.75%. This announcement arrived shortly after Japan reported a notable slowdown in its headline inflation for December, which decreased to 2.1% from November’s 2.9%. The sustained high levels of core-core inflation at 2.9% have raised eyebrows, indicating persistent price pressures in the economy.
The steadiness in Bitcoin prices was striking, remaining largely unperturbed by the BOJ’s decision and trading close to $90,000 throughout the day. This lack of movement in the cryptocurrency’s price reflects a certain detachment or stabilization amid shifting economic indicators.
Detailed analysis from the Ministry of Internal Affairs and Communications revealed that, while Japan’s core inflation eased to 2.4% from 3% the previous month, the core-core inflation metric—exempting both fresh food and energy—held steady, reinforcing concerns over underlying inflation dynamics. Analysts at ING highlighted these persistent pressures, emphasizing that fluctuations driven by energy subsidies may be concealing the reality of inflation.
In response to the aforementioned economic data, the Japanese yen weakened slightly by over 0.20%, trading at 158.70 per US dollar. The correlation between the yen and Bitcoin has been notably high lately, with a 90-day coefficient resting at 0.84, suggesting that movements in one asset can influence the other significantly.
Moreover, the yields on Japanese government bonds reacted to the BOJ’s signals as the 10-year yield rose by 3 basis points to 1.12%. This uptick in yields indicates trader expectations for continued interest rate hikes in the upcoming months, attributable to stubborn inflation metrics.
Amidst these developments in Japan, US stock futures showed a positive trajectory on Friday morning, with S&P 500 and Nasdaq 100 futures climbing around 0.3%, following a series of two consecutive days of gains. This momentum has been partly fueled by easing geopolitical tensions that have been weighing on investor sentiment.
The Dow Jones Industrial Average futures logged a modest increase of 0.1%. However, not all news was optimistic; shares of Intel experienced a significant decline of over 10% in extended trading after the semiconductor giant issued a weaker-than-expected forecast for the first quarter.
On a different note, commodities markets have also been witnessing notable movements. Gold prices surged past $4,900 for the first time in history, prompting Goldman Sachs to adjust its forecast, projecting gold could reach $5,400 by the end of 2026.
Thus far, Bitcoin’s relatively flat performance amidst active shifts in US and international markets suggests a cautious but resilient standing within the evolving economic landscape. Investors are keenly watching both traditional markets and cryptocurrencies as volatility remains a defining characteristic of this year’s financial tapestry.
