The Bank of Japan will hold an interest rate meeting today and tomorrow, with the decision announced on the 19th. The chief analyst believes that the probability of a rate hike is very high, which is also the main negative factor suppressing risk assets recently. The market has already partially priced in this expectation overnight, and with the CPI data to be released at 21:30 tonight, recent market movements are bound to experience intense volatility.

Let's break down the core logic of these two major pieces of news:

1. Interest Rate Meeting: Previously, many institutions borrowed low-interest yen and converted it into USD to invest in other high-yield assets. If Japan raises interest rates, the cost of yen borrowing will increase, and the yen will appreciate. This arbitrage strategy will become unprofitable. At that time, institutions will sell off overseas assets to buy back yen to repay loans, which will impact risk asset prices.

2. CPI Data: As a key indicator of inflation levels, its trend directly influences the Federal Reserve's monetary policy expectations. If inflation is below expectations, the probability of a rate cut in January will increase, reducing the attractiveness of the USD, and funds will shift to higher-yield assets; if inflation remains high, the Fed may delay rate cuts, causing funds to withdraw from other assets and flow back into USD assets.