Japan’s money supply, covering currency in circulation and different deposits (M2+CD), grew by 1.8% in November year-on-year, a rise from 1.6% in October. This reflects ongoing growth in the money supply, pointing to consistent demand for liquidity in the economy.<\/p>\n
The Bank of Japan continues to adopt an accommodative monetary policy aimed at supporting economic growth and addressing low inflationary conditions. In parallel, market movements show variability as market participants monitor global economic indicators and forthcoming decisions from central banks in key economies.<\/p>\n
The slight increase in Japan’s M2 money supply to 1.8% confirms the Bank of Japan is sticking with its easy-money policy. This reinforces the view that Japanese interest rates will remain near zero for the foreseeable future. Traders should anticipate this persistent policy stance to continue into the new year.<\/p>\n
This policy divergence is stark when we look at the United States, where the Federal Reserve is holding its key rate around 4.5% to manage inflation that was last reported at 3.1% for November 2025. This significant yield difference continues to put downward pressure on the Japanese Yen. We see potential in strategies that benefit from a strong dollar against the yen, such as buying USD\/JPY call options or futures contracts.<\/p>\n
For equity traders, the BoJ’s accommodative stance remains a tailwind for Japanese stocks. The Nikkei 225 has already seen gains of over 15% this year, and continued liquidity suggests this trend could persist. We are considering buying call options on the Nikkei 225 index to capitalize on further upside potential.<\/p>\n
The reason for the BoJ’s caution is clear from recent data, as Japan’s Q3 2025 GDP growth was a tepid 0.4%, and core inflation remains just under the 2% target. This fragile economic picture means any policy tightening is highly unlikely in the coming weeks. This stability in policy makes long-equity and short-yen positions more predictable.<\/p>\n
However, we must remain watchful for volatility, especially with the USD\/JPY pair testing multi-decade highs near the 158 level throughout the autumn of 2025. While the fundamental case is strong, the risk of verbal or actual intervention from Japanese authorities to support the yen is elevated. This suggests that using options to define risk could be a prudent approach to these trades.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" Japan\u2019s money supply rose 1.8% in November, indicating steady liquidity demand and accommodative monetary policy.<\/p>\n","protected":false},"author":62,"featured_media":17053,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-36318","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/36318","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/users\/62"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/comments?post=36318"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/36318\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media\/17053"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media?parent=36318"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/categories?post=36318"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/tags?post=36318"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}