USD/JPY Weekly Fundamental Analysis June 11-15, 2012, Forecast

Introduction: In the USD/JPY trade, trying to pick tops or bottoms during that time would have been difficult. However, with the bull trend so dominant, the far easier and smarter trade was to look for technical opportunities to go with the fundamental theme and trade with the market trend rather than to trying to fade it.
Against the Japanese yen, whose central bank held rates steady at zero, the dollar appreciated 19% from its lowest to highest levels. USD/JPY was in a very strong uptrend throughout the year, but even so, there were plenty of retraces along the way. These pullbacks were perfect opportunities for traders to combine technicals with fundamentals to enter the trade at an opportune moment. 

  • The interest rate differential between the Bank of Japan(BoJ) and the Federal Reserve
  • Japanese government intervention to maintain their currency sends USD/JPY lower

 

Weekly Analysis and Recommendation:

The USD/JPY declined on Friday after a strong week. The pair closed at 79.46 as shown at the chart below.

Date

Last

Open

High

Low

Change %

Jun 08, 2012

79.46

79.71

79.73

79.12

-0.31%

Jun 07, 2012

79.71

79.30

79.79

79.21

0.50%

Jun 06, 2012

79.31

78.74

79.39

78.61

0.72%

Jun 05, 2012

78.74

78.35

78.95

78.11

0.49%

Jun 04, 2012

78.36

78.07

78.42

77.99

0.35%

The Japanese currency witnessed solid gains in the previous week, which acted as a worrying factor for the Bank of Japan. Every now and then, the officials of BOJ were giving assurance that they are monitoring the yen and they are struggling to calm down the strengthening currency. They had also warned that they will intervene in the Forex market anytime if the currency keeps on moving up further. This week, we saw yen falling against US dollar as the Finance Minister said that the G-7 nations will support the intervention in the currency market. The currency continued the weak trend on account of suspected intervention.

The Japanese yen gained against all its majors in the past week and notched up gains of more than 2% against the greenback. The demand for safer assets and a fall in the greenback kept the Yen on a higher note. Going forward this week, the economic data is expected to weaken slightly as the Leading Index and Gross Domestic Product for the first quarter come in lower. This could be slightly negative for the economy and the currency. So, this week, based on the slightly weaker economic conditions in Japan, we expect the currency to weaken. However; the losses would be limited as demand for safe-haven assets still remains strong. Overall, we expect the currency to remain in a range for the coming week.

FxEmpire provides in-depth analysis for each currency and commodity we review. Fundamental analysis is provided in three components. We provide a detailed monthly analysis and forecast at the beginning of each month. Then we provide more recent analysis and information in our weekly reports and we provide daily updates and outlooks. 

Major Economic Events for the week of June 4 – 8 actual v. forecast for Yen, the Aussie, the Kiwi and USD

Date

Currency

 Event

Actual

Forecast

Previous

Jun 5

AUD

Cash Rate

3.50%

3.50%

3.75%

USD

ISM Non-Manufacturing PMI

53.7

53.6

53.5

AUD

GDP q/q

1.3%

0.5%

0.6%

Jun 6

AUD

Employment Change

38.9K

-2.2K

7.0K

AUD

Unemployment Rate

5.1%

5.1%

5.0%

Jun 7

USD

Unemployment Claims

377K

381K

389K

JPY

Current Account

0.29T

0.62T

0.79T

AUD

Trade Balance

-0.20B

-0.92B

-1.28B

Jun 8

USD

Trade Balance

-50.1B

-49.4B

-52.6B

Historical:

Highest: 108.00 on Sep 19, 2008

Average: 87.08 over this period

Lowest: 75.58 on Oct 31, 2011

Economic Highlights of the coming week that affect the AUD, JPY and NZD

Date

Time

Currency

 Event

Forecast

Previous

Jun 11

23:50

JPY

Tertiary Industry Activity m/m

 

-0.6%

Jun 12

1:30

AUD

NAB Business Confidence

 

4

12th-14th

NZD

REINZ HPI m/m

 

-0.3%

23:50

JPY

Core Machinery Orders m/m

 

-2.8%

Jun 13

0:30

AUD

Westpac Consumer Sentiment

 

0.8%

21:00

NZD

Official Cash Rate

2.50%

2.50%

21:00

NZD

RBNZ Press Conference

   

 

21:00

NZD

RBNZ Monetary Policy Statement

 

 

 

Jun 14

1:00

AUD

MI Inflation Expectations

 

3.1%

 

 

 

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