POWER: Bnetza Keeps Biomass Tender Max Price Unchanged in 2025

• A very moderate blip lower for USDJPY on the back of that Kyodo headline, however very much in the direction of travel across the NY crossover, with the pair unable to hold gains above the 156.00 handle overnight. While spot remains around 155.50, it is worth noting that the 50-day EMA was pierced overnight and while the overall trend condition remains bullish for now, a close below this average would be a bearish development.
• Trendline support drawn from the September lows appears significant and this level currently intersects at 154.35. Several analysts have pointed to a rate hike being unlikely to move the dial for the JPY at this juncture, with a greater focus placed on any accompanying guidance.
• Goldman Sachs economists have long been calling for a January rate hike, but they also expect an emphasis on gradual hikes going forward. They note that alongside a Fed now most likely to be on hold for a while, BoJ hikes are even less JPY-positive on the margin. Moreover, GS have previously stressed that gradual BoJ hikes are not an impediment to a weaker Yen and, in fact, a weak Yen allows for more sustained policy tightening.
• MUFG have said with the market already more fully pricing in another hike now, they doubt that the yen will strengthen significantly especially as the updated guidance is likely to stick to gradual rate hike plans.
• Recall that CIBC have recommended a tactical long at 156.00, details here.

• Donald Trump on Monday night said he prefers a 25% tariff on Canada and Mexico for Feb. 1, though refraining from earlier signals he would do this upon taking office.
• Canadian Finance Minister Dominic LeBlanc said tariffs would be "a mistake" drawing a response that hurts America's job creation and boosts inflation. Officials have signaled they are planning a dollar-for-dollar retaliation, and export taxes on any goods like oil exempted by Trump.
• Prime Minister Justin Trudeau will resign March 24 to allow for a Liberal leadership race, also hanging on to deal with Donald Trump's threats including use of "economic force."
• Mark Carney and Chrystia Freeland joined the Liberal leadership race with a decision set for March 9, and as of yet no debates or other events have been announced by the party. Many cabinet ministers touted as candidates have opted out of a race with a record CAD350,000 fee in a nation with tight contribution limits.
• Trudeau has suspended Parliamentary business until his March 24 resignation, short-circuiting opposition parties who intended to force a snap election when the legislature had been due to open Jan. 27.
• Polling aggregator 338Canada shows Conservatives likely to win majority government if election were held now.
• Sample headlines: Holy heck, that Mark Carney launch was a letdown (Star); I’ve seen student unions better organized than the Liberal party (Toronto Star).

Kyodo sources suggest that the BoJ is moving towards the idea of a rate hike at this week’s monetary policy meeting.

• This is In line with wider market pricing (~90% odds of a hike priced for that event) and sell-side consensus (30/44 in the BBG survey look for a 25bp move, 1 looks for a 10bp hike).
• The story perhaps carries more weight than most as it comes via local press but is generally in line with wider source reports seen in recent weeks at first glance.
• A reminder that our Tokyo policy team previously noted that “the Bank of Japan board will consider hiking the policy rate to 0.5% due to strong wage growth momentum, but it sees no issue holding the rate steady should market volatility increase following President-elect Donald Trump’s inauguration on Jan 20.”
• This was perhaps less committal than some of the source reports provided by other wires, but the MNI markets team believes that the initial market reaction to the Trump Presidency shouldn’t prevent a BoJ hike (at least at this stage).