On December 12, former Bank of Japan (BOJ) executive Hideo Hayakawa projected that Governor Kazuo Ueda could implement up to four rate hikes by 2027, with three following a widely anticipated increase next week. This forecast signals Japan's shift toward a more aggressive monetary tightening cycle.

Hayakawa stated in a Bloomberg interview that the BOJ "may believe it has fallen behind the curve," suggesting Governor Ueda will indicate further tightening even after next week's hike. Markets widely expect the BOJ to raise rates to 0.75% on December 19, marking its first hike since January. Former central bank officials warned that Prime Minister Sanae Takaichi's expansionary fiscal policies could force the BOJ to accelerate rate hikes and push terminal rates higher. Takaichi's recent stimulus package, exceeding economists' expectations, may exacerbate inflationary pressures, reinforcing Japan's exit from ultra-loose monetary policy. Investors should brace for more frequent policy adjustments.

Meanwhile, despite gold prices hitting record highs, U.S. private investors' gold holdings remain stagnant, according to a Goldman Sachs report. Since the mid-2000s launch of gold ETFs, U.S. private allocations to gold ETFs remain 6 basis points below their 2012 peak. As of Q2 2025, gold ETFs accounted for just 0.17% of U.S. private financial portfolios—a negligible fraction of the $112 trillion in household stock and bond assets. Goldman analysts attributed this to "portfolio growth outpacing gold price and trading volume gains over the past decade," even as gold prices surged to all-time highs in 2025.

Key data to watch today includes Germany’s November CPI (final), UK October GDP, industrial output, and goods trade balance.

**Gold/USD** Gold surged yesterday, breaching the 4280 mark to hit a 7-week high, now trading near 4267. The rally was driven by the Fed’s expected 25bps rate cut and less hawkish-than-anticipated guidance, alongside weak U.S. jobless claims. Geopolitical tensions also bolstered safe-haven demand. Resistance is eyed at 4320, with support at 4230.

**USD/JPY** USD/JPY dipped slightly to 155.70, pressured by a softer dollar amid weak U.S. data and the Fed’s dovish tilt. Rising BOJ hike expectations for December added downward momentum. Resistance lies at 156.50, support at 155.00.

**USD/CAD** USD/CAD fell to a 12-week low near 1.3770, weighed by broad dollar weakness and the Bank of Canada’s hawkish signals. Crude oil’s retreat limited losses. Resistance is at 1.3850, support at 1.3700.