EUR/JPY Fundamental Analysis July 4, 2012, Forecast

Analysis and Recommendations:

The EUR/JPY is trading up at 100.33 as European markets close for the day. US markets will close early today and be closed on Wednesday for the US holiday.

JPY is weaker, down 0.4% from yesterday’s close as market participants reverse safe haven flows in favor of risk assets.  The shift is being driven by expectations of wide-spread easing from central banks, given yesterday’s PMI data that underlined the global nature of the recent deceleration in growth. Whereas the euro continues to climb as the expectations that the ECB will reduce rates at its meeting on Friday.

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

Economic Data July 2 – 3, 2012 actual v. forecast

Date

Currency

 Event

Actual

Forecast

Previous

Jul 2

USD

ISM Manufacturing PMI

49.7

52.1

53.5

AUD

Building Approvals m/m

27.3%

5.1%

-7.6%

JPY

Average Cash Earnings y/y

-0.8%

0.6%

0.2%

AUD

Cash Rate

3.50%

3.50%

3.50%

 

Upcoming Economic Events that affect the AUD, NZD, JPY and USD

Date

Time

Currency

 Event

Forecast

Previous

Jul 4

1:30

AUD

Retail sales

0.3%

-0.2%

Jul 5

1:30

AUD

Trade Balance

-0.51B

-0.20B

 

12:15

USD

ADP Non-Farm Employment Change

101K

133K

12:30

USD

Unemployment Claims

385K

386K

14:00

USD

ISM Non-Manufacturing PMI

53.1

53.7

15:00

USD

Crude Oil Inventories

 

-0.1M

Jul 6

12:30

USD

Non-Farm Employment Change

92K

69K

12:30

USD

Unemployment Rate

8.2%

8.2%

 

EUR/JPY Forecast July 3, 2012, Technical Analysis

The EUR/JPY pair fell during the Monday session as the Euro lost ground from the Friday rally against most currencies. As with all things European, it appears that these meetings last week may have been left with fewer than necessary details for the market feel comfortable again. This particular currency pair does a wonderful job of tracking risk appetite around the world. As you can see, some of the enthusiasm has already come out of the marketplace.

This isn’t to say that we are going to break down seriously at this point, rather than the market has retraced to the 100 level again. We simply think that this market may be a bit of consolidation between the 100 and 98 levels. With this in mind, this is a short-term traders market and we suspect that it will grind sideways until the Friday release of the nonfarm payrolls number in the United States. Currently, we are flat of this market.

EUR/JPY Forecast July 3, 2012, Technical Analysis
EUR/JPY Forecast July 3, 2012, Technical Analysis

EUR/JPY Fundamental Analysis July 3, 2012, Forecast

Analysis and Recommendations:

The EUR/JPY is trading at 100.47 at this writing (3GMT). The euro has fallen in today’s session as the JPY has strengthened on a better than expected Tankan Manufacturing release reported at -1 when -4 was the forecast. Also Chinese PMI released earlier till showed a slowdown in manufacturing in China; the report came in at forecast, but still below the 50 level to show growth.

The euro was able to hold on to most of Friday’s gain, as investor and analysts still sift through the EU proposals. Norway today blocked the used of the EFSF to purchase bonds, putting a big dent in the EU plans.

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

Economic date for July 2, 2012 actual v. forecast

Date

 

Currency

 

 

 

Event

Actual

 

Forecast

 

Previous

 

 

 July 2

 

JPY

 

 

 

Tankan Large Manufacturers Index 

-1

 

-4 

 

-4 

 

 

 

 

CNY

 

 

 

Chinese HSBC Manufacturing PMI 

48.20

 

 

 

48.10 

 

 

 

 

CHF

 

 

 

Retail Sales (YoY) 

6.2%

 

5.0% 

 

0.2% 

   

 

 

CHF

 

 

 

SVME PMI 

48.1

 

45.0 

 

45.4 

 

 

 

 

EUR

 

 

 

French Manufacturing PMI 

45.2

 

45.3 

 

45.3 

 

 

 

 

EUR

 

 

 

German Manufacturing PMI 

45.0

 

44.7 

 

44.7 

 

 

 

 

EUR

 

 

 

Manufacturing PMI 

45.1

 

44.8 

 

44.8 

 

 

 

 

GBP

 

 

 

Manufacturing PMI 

48.6

 

46.7 

 

45.9 

 

 

 

 

EUR

 

 

 

Unemployment Rate 

11.1%

 

11.1% 

 

11.0% 

 

 

 

 

USD

 

 

 

ISM Manufacturing Index 

47.9 

 

52.0 

 

53.5 

 

 

 

Upcoming Economic Events that affect the CHF, EUR, GBP and USD

Date

Time

Currency

 Event

Forecast

Previous

Jul 3

3rd-6th

GBP

Halifax HPI m/m

-0.3%

0.5%

4:30am

GBP

Construction PMI

53.1

54.4

4:30am

GBP

Net Lending to Individuals m/m

1.1B

1.4B

10:00am

USD

Factory Orders m/m

0.1%

-0.6%

Jul 4

 

 

 

 

Jul 5

4:00am

EUR

Final Services PMI

46.8

46.8

4:30am

GBP

Services PMI

53.0

53.3

5:00am

EUR

Retail Sales m/m

0.2%

-1.0%

6:00am

EUR

German Factory Orders m/m

0.2%

-1.9%

7:00am

GBP

Official Bank Rate

0.50%

0.50%

7:45am

EUR

Minimum Bid Rate

0.75%

1.00%

8:15am

USD

ADP Non-Farm Employment Change

101K

133K

8:30am

USD

Unemployment Claims

385K

386K

10:00am

USD

ISM Non-Manufacturing PMI

53.1

53.7

11:00am

USD

Crude Oil Inventories

 

-0.1M

Jul 6

3:00am

CHF

Foreign Currency Reserves

 

303.8B

3:15am

CHF

CPI m/m

-0.3%

0.0%

4:30am

GBP

PPI Input m/m

-2.1%

-2.5%

6:00am

EUR

German Industrial Production m/m

0.3%

-2.2%

8:30am

USD

Non-Farm Employment Change

92K

69K

8:30am

USD

Unemployment Rate

8.2%

8.2%

Government Bond Auctions

Date  Time  Country 

Jul 03 08:30 Holland

Jul 03 09:15 Austria 

Jul 03 09:30 Belgium 

Jul 03 09:30 UK 

Jul 03 14:30 UK 

Jul 04 09:30 UK 

Jul 05 08:30 Spain

Jul 05 08:50 France 

Jul 05 15:00 US

EUR/JPY Forecast July 2, 2012, Technical Analysis

The EUR/JPY pair shot straight up on Friday as the announcement out of the European Union meeting got everyone giddy. The move stopped right at the 101 level, and as a result it looks like we are simply at the top of the most recent consolidation range. The breaking of 101 on a daily close would be our signal to get long, and it isn’t until that move that we could consider doing so.

The selling of this pair will require a weak candle, and this is something that we would be looking for at this point. The “solution” that the EU came up with lacks one important thing: details. Because of this, we think this rally will ultimately fail, and that the large move was due to short covering just as much as anything else.

EUR/JPY Forecast July 2, 2012, Technical Analysis
EUR/JPY Forecast July 2, 2012, Technical Analysis

EUR/JPY Forecast for the Week of July 2, 2012, Technical Analysis

The EUR/JPY pair had a wild week as it was initially very bearish, only to bounce back and form a massive hammer. This is the third hammer a row, and it does suggest that a bounce is coming in this market. The 100 level is the “epicenter” of the support zone, and it does look like the market has a natural proclivity to break back above the 101 level. With this being said, a break of the highs from the previous week’s hammer would in fact be very bullish.

With all this being said, it can be very difficult to sell this market and as such we want. If we choose to go long the Yen, we will do against other currencies as this one looks a very well supported. Again, a break of last week’s highs would have us buying this market, and perhaps aiming for as high as 106.

EUR/JPY Forecast for the Week of July 2, 2012, Technical Analysis
EUR/JPY Forecast for the Week of July 2, 2012, Technical Analysis

EUR/JPY Weekly Fundamental Analysis July 2-6, 2012, Forecast

Introduction: This is one of the most popular crosses. The primary reason why EUR/JPY has rallied 11 percent over the past 3.5 months is because of US growth – not many people realize that the price action of EUR/JPY is directly correlated with how the US economy is doing.

Weekly Analysis and Recommendations:

The EUR/JPY ended the month on a high note, after the euro sailed against all of its partners on the release of a plan from the EU Ministers.

Date

Last

Open

High

Low

Change %

Jun 29, 2012

101.05

98.67

101.39

98.54

2.41%

Jun 28, 2012

98.67

99.35

99.47

98.33

-0.69%

Jun 27, 2012

99.35

99.22

99.61

99.08

0.13%

Jun 26, 2012

99.22

99.60

99.89

98.75

-0.37%

Jun 25, 2012

99.59

101.03

101.03

99.17

-1.42%

This week saw Japan pass an increase in consumption tax, which took its toll on Prime Minister Noda’s coalition government which is in turmoil, after spending all of his political capital to pass the law.

Most of the week markets continued on risk aversion mode until Friday’s news. The euro surged adding over 2 cents against the USD, while investors also moved to more risk assets, but markets will not fully digest the moves until Monday.

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 25 – 29 actual v. forecast for Yen, the Aussie and the Kiwi

Date

Currency

 Event

Actual

Forecast

Previous

Jun 26

NZD

Trade Balance

301M

305M

335M

Jun 27

JPY

Retail Sales y/y

3.6%

3.1%

5.7%

AUD

HIA New Home Sales m/m

0.7%

 

6.9%

NZD

NBNZ Business Confidence

12.6

 

27.1

Jun 28

NZD

Building Consents m/m

-7.1%

 

-7.6%

JPY

Household Spending y/y

4.0%

2.5%

2.6%

JPY

Tokyo Core CPI y/y

-0.6%

-0.7%

-0.8%

JPY

Prelim Industrial Production m/m

-3.1%

-2.7%

-0.2%

AUD

Private Sector Credit m/m

0.5%

0.5%

0.4%

 

Historical:

Highest: 156.83 JPY on Sep 22, 2008

Average: 118.28 JPY over this period.

Lowest: 95.61 JPY on Jun 01, 2012

 

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

Date

Time

Currency

 Event

Forecast

Previous

Jul 2

10:00am

USD

ISM Manufacturing PMI

52.1

53.5

9:30pm

AUD

Building Approvals m/m

5.1%

-8.7%

9:30pm

JPY

Average Cash Earnings y/y

0.6%

0.2%

Jul 3

12:30am

AUD

Cash Rate

3.50%

3.50%

10:00am

USD

Factory Orders m/m

0.1%

-0.6%

7:30pm

AUD

AIG Services Index

 

43.5

9:30pm

AUD

Retail Sales m/m

0.3%

-0.2%

Jul 4

9:30pm

AUD

Trade Balance

-0.51B

-0.20B

Jul 5

8:15am

USD

ADP Non-Farm Employment Change

101K

133K

8:30am

USD

Unemployment Claims

385K

386K

10:00am

USD

ISM Non-Manufacturing PMI

53.1

53.7

11:00am

USD

Crude Oil Inventories

 

-0.1M

Jul 6

8:30am

USD

Non-Farm Employment Change

92K

69K

8:30am

USD

Unemployment Rate

8.2%

8.2%

EUR/JPY Fundamental Analysis July 2, 2012, Forecast

Analysis and Recommendations:

The EUR/JPY skyrocketed today, to close the week at 100.12. The euro gained against all of its trading partners after the EU Ministers released a statement with a plan for the EU financial crisis.

The statement released early morning on Friday stated:

a)      Said the below points have not been fully approved.

b)      A proposal for a single bank supervisor (including the ECB).

c)      Once a single bank supervisor is established, the ESM could have the possibility to recapitalize banks directly.

d)      The EFSF will be used until the ESM becomes available.

e)      EFSF loans will be then transferred to the ESM without any seniority (the ESM as currently structured has seniority).

f)       Strong commitment to do what is necessary.

g)      The above to be implemented by July 9, 2012.

Global sentiment immediately changed as investors hailed the plan and moved to more risk, the euro remained powerful throughout the day, while the JPY had several eco releases that were so strong and the political turmoil with Prime Minister Noda’s coalition close to collapse weakened the JPY.

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

Economic Data for June 29, 2012 actual v. forecast

Date

 

Currency

 

 

 

Event

Actual

 

Forecast

 

Previous

 

 

 

 

JPY

 

 

 

Unemployment Rate 

4.4%

 

4.6% 

 

4.6% 

 

 

 

 

JPY

 

 

 

Tokyo Core CPI (YoY) 

-0.6%

 

-0.7% 

 

-0.8% 

 

 

 

 

JPY

 

 

 

Industrial Production (MoM) 

-3.1%

 

-2.8% 

 

-0.2% 

 

 

 

 

EUR

 

 

 

French GDP (QoQ) 

0.0%

 

0.0% 

 

0.0% 

 

 

 

 

EUR

 

 

 

French Consumer Spending (MoM) 

0.4%

 

-0.1% 

 

0.7% 

   

 

 

CHF

 

 

 

KOF Leading Indicators 

1.16

 

0.85 

 

0.80 

   

 

 

NOK

 

 

 

Norwegian Core Retail Sales (MoM) 

1.70%

 

0.50% 

 

-0.20% 

 

 

 

 

EUR

 

 

 

CPI (YoY) 

2.4%

 

2.4% 

 

2.4% 

 

 

 

 

USD

 

 

 

Core PCE Price Index (MoM) 

0.1%

 

0.2% 

 

0.1% 

 

 

 

 

CAD

 

 

 

GDP (MoM) 

0.3%

 

0.2% 

 

0.1% 

 

 

 

 

USD

 

 

 

Personal Spending (MoM) 

0.0%

 

0.1% 

 

0.1% 

   

 

 

USD

 

 

 

Chicago PMI 

NR 

 

52.5 

 

52.7 

 

 

 

 

USD

 

 

 

Michigan Consumer Sentiment 

NR 

 

74.1 

 

74.1 

   

  

Upcoming Economic Events for Monday July 2, 2012

Date

 

Currency

 

 

 

Event

Actual

 

Forecast

 

Previous

 

 

 

 

JPY

 

 

 

Tankan Large Manufacturers Index 

 

 

-4 

 

-4 

 

 

 

 

CHF

 

 

 

Retail Sales (YoY) 

 

 

4.5% 

 

0.1% 

 

 

 

 

CHF

 

 

 

SVME PMI 

 

 

45.0 

 

45.4 

 

 

 

 

EUR

 

 

 

Unemployment Rate 

 

 

11.1% 

 

11.0% 

 

 

 

 

USD

 

 

 

ISM Manufacturing Index 

 

 

52.5 

 

53.5 

   

Government Bond Auctions

Jul 02 09:10 Norway 

Jul 03 08:30 Holland

Jul 03 09:15 Austria 

Jul 03 09:30 Belgium 

Jul 03 09:30 UK  

Jul 03 14:30 UK 

Jul 04 09:30 UK 

Jul 05 08:30 Spain

Jul 05 08:50 France 

Jul 05 15:00 US

EUR/JPY Forecast June 29, 2012, Technical Analysis

The EUR/JPY pair fell during the Thursday session as the concerns in Europe continued. However, by the end of the session we saw a hammer forms and it looks as if we are staying within the consolidation area between 98.50 and 101.50 or so. On a break of the top of this hammer from the Thursday session, we figure that this market will continue to bounce around in this rectangle, but ultimately should show weakness. With the trend being so bearish, we prefer selling this market on rallies. We will do so on week candles closer to the 101 handle as it is significant resistance. On a break of the bottom of Thursday’s range, we would become aggressively short.

 

EUR/JPY Forecast June 29, 2012, Technical Analysis
EUR/JPY Forecast June 29, 2012, Technical Analysis

EUR/JPY Fundamental Analysis June 29, 2012, Forecast

Analysis and Recommendations:

The EUR/JPY is trading at 98.75 down 0.65 as the euro weakened on eco data from Germany showing a rise in unemployment and an increase in claims.

The PBOC was active overnight, issuing CNY 30bn in reverse repos at a yield of 4.15% in order to address a cash shortage at quarter end that had caused short-term yields to rise markedly. It’s not clear if this is being done in lieu of a reduction in reserve ratio requirements, or is a preliminary measure as the PBOC waits until quarter end passes to measure the liquidity conditions of banks prior to making larger policy moves. The additional liquidity is a plus for the JPY.

As problems stemmed from the EU Summit, risk aversion continued to mount, helping to support the JPY.

Investors see a risk that larger short-term measures are introduced at this Summit in order to address the very steep yields on Spanish and Italian debt instead of divisive action.  Even if there are not any tangible measures introduced, the summit definitely provides ample space for rumors to circulate in markets. In sum, markets will be on edge today and tomorrow.

Although much of Europe seems to be in crisis, it’s worth noting that while the German economy may be performing sluggishly the German labor market is still quite strong. 7k more people were added to the ranks of the unemployed in June, causing Germany’s unemployment rate to edge up to 6.8% from 6.7% in May

Spain and Italy released CPI data for June. Spain’s CPI is tracking at 1.9% y/y (1.8% on a ‘EU harmonized’ basis) and fell moderately on the month, while Italy’s CPI surprised to upside, rising by 0.2% m/m. Food prices increased more than expected in Italy (+0.9% m/m) while lower energy costs only filtered into the transportation costs category in a limited fashion (transportation declined by -0.2% m/m). 

In this context, European economic confidence data released today showed a general deterioration in the way in which European businesses view the overall business climate. Industrial business confidence fell from -11.4 in May to -12.7 in June, consumer confidence fell to -19.8 on the index, and the services sector measure fell from -5.2 to -7.4. The overall confidence index fell from 90.5 in May to 89.9 in June.

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

Economic Data for June 28, 2012 actual v. forecast… and you didn’t think it could get worse. The German workhorse breaks a leg…

Date

 

Currency

 

 

 

Event

Actual

 

Forecast

 

Previous

 

 

Jun. 28

 

JPY

 

 

 

Retail Sales (YoY) 

3.6%

 

3.0% 

 

5.7% 

   

 

 

AUD

 

 

 

HIA New Home Sales (MoM) 

0.7%

 

 

 

6.9% 

 

 

 

 

GBP

 

 

 

Nationwide HPI (MoM) 

-0.6%

 

0.1% 

 

0.2% 

   

 

 

EUR

 

 

 

German Unemployment Rate 

6.8%

 

6.7% 

 

6.8% 

   

 

 

EUR

 

 

 

German Unemployment Change 

7K

 

5K 

 

0K 

 

 

 

 

GBP

 

 

 

Business Investment (QoQ) 

1.9%

 

3.6% 

 

3.6% 

 

 

 

 

GBP

 

 

 

Current Account 

-11.2B

 

-9.0B 

 

-7.2B 

   

 

 

GBP

 

 

 

GDP (QoQ) 

-0.3%

 

-0.3% 

 

-0.3% 

 

 

 

 

GBP

 

 

 

GDP (YoY) 

-0.2%

 

-0.1% 

 

-0.1% 

 

 

 

 

EUR

 

 

 

Italian 10-Year BTP Auction 

6.19%

 

 

 

6.03% 

 

 

And the good news is or almost good news

USD

 

 

 

Initial Jobless Claims 

386K

 

385K 

 

392K 

 

 

USD

 

 

 

GDP Price Index (QoQ) 

2.0%

 

1.7% 

 

1.7% 

 

 

USD

 

 

 

GDP (QoQ) 

1.9%

 

1.9% 

 

1.9% 

 

 

USD

 

 

 

Continuing Jobless Claims 

3296K

 

3280K 

 

3311K 

   

 

There are no additional reports due in Japan on Friday, only US data

Date

Time

Currency

Event 

Previous

Jun 29

12:30

USD

Core PCE Price Index m/m

0.1%

 

12:30

USD

Personal Spending m/m

0.3%

13:45

USD

Chicago PMI

52.7

13:55

USD

Revised UoM Consumer Sentiment

74.1

 

EUR/JPY Forecast June 28, 2012, Technical Analysis

The EUR/JPY pair rose ever so slightly during the session on Wednesday as the risk on appetite came back a bit. However, it currently looks as if the market is stuck in consolidation. The 99 handle looks as if it is support, as the hammer formed on Tuesday suggests as such. The 102 level above looks like a resistance area, and with the European Union summit going on over the next two sessions, this pair will be very headline driven over the next 48 hours. Because of this, we are waiting for a breakout above the 102 level, or a breakdown below the 99 handle.

EUR/JPY Forecast June 28, 2012, Technical Analysis
EUR/JPY Forecast June 28, 2012, Technical Analysis

Forex and Commodities As the EU Summit Begins

Asian equities are trading positive after improved US releases coupled with positive western equities. Early morning, the economic releases from Japan increased more than expectation supporting gains in riskier assets. This morning finds Prime Minister Noda‘s coalition government in turmoil as Noda exhausted all of his political capital to pass the increase in consumption tax, which was necessary to save the economic and financial health of Japan. Many of his supporters voted against him, leaving his coalition government weakened and possibly without a majority.

 Investors cheered encouraging US economic data, but an EU summit later in the day could limit gains, with Euro-zone leaders seeming more divergent than ever in their views after Germany rejected calls for common Euro-zone bonds. On the eve of an EU summit that could determine the future of the Euro-zone, German Chancellor brushed aside increasingly shrill calls from Spain and Italy for emergency action to lower their soaring borrowing costs.

European Union leaders go into the two-day meeting starting today and any improvement on the same may support further gains in base metals. However, metal but prices could falter with markets tense ahead of the European summit deeply divided on how to tackle the protracted Euro-zone debt crisis and stop it spreading further. From the economic data front, the Euro-zone confidence numbers may dwindle while German unemployment may remain unchanged.

The UK GDP along with current account balance may further weigh on gains the markets in the afternoon. Later in the evening the US releases in the form of GDP, personal consumption and labor releases may continue to improve slightly and may support gains in commodities

During the European session, currencies and commodities might respond to the development of the Euro summit while later better releases from US may continue to support gains. Overall, amidst positive equities and improved economic releases from US markets are expected to continue on a positive note.

Whereas Gold has surrendered to the worries about global weakness but the seesaw movement we witnessed yesterday followed from the misjudged interpretation of the Barclays newscast. The EU meeting is not expected to reveal any sort of influential conclusion, and is now apparent after Germany showed lethargy about a tight fiscal amalgamation across the Euro zone.

Hence, it is doubtful that gold will turn upward despite the euros climbed up by 0.40% against the dollar. Expect a slight pull back in gold during the European hours amid anticipation of the Euro summit for a possible strategy outcome.

Markets are expected to react tomorrow at the close of the meetings, when an acceptable plan is not put forth. Issuance of the joint Euro bonds is under doubt after Merkel strongly commented it as a wrong way to achieve the integration while; the Spanish, Italian and French chiefs are pushing hard for the same with aim for growth. The dispute between them could therefore be proved as a headwind for the market especially after the consensus broke down to safe guard Spain and Italy while; the adding Cyprus, the fifth European nation so far could be bailed out today. All eyes will be on Monti from Italy, as he is following the same path of denial as Rajoy from Spain.

EUR/JPY Fundamental Analysis June 28, 2012, Forecast

Analysis and Recommendations:

The EUR/JPY is trading at 99.31 having fallen 0.05% in a very quiet calm trading day. The euro continues to be weak against most of its trading partners as euro sentiment remains negative.

Markets are trading fairly flat to start the day. Not much is happening in the currency space, with the DXY flat, EURUSD flat, CAD flat and AUD flat. Equities in Asia traded mixed, with the Nikkei higher (+0.77%) and Shanghai slightly lower (-0.23%).

European equities are trading with a slightly positive bias. Commodities are generally weaker with the CRB index down 0.3%.WTI for settlement in August is trading at US$79.20 while the Brent August future is trading at US$92.50. Safe haven bond yields are moderately higher, with US, German and for those matter Canadian 10-years higher between 2-5bps. While Italy’s bond yields are more-or-less unchanged on the day, yields at the front end of the Spanish curve have shot up after the Spanish government said that financial markets are essentially closed to Spain.

New Zealand’s trade balance came in at NZD +0.35b in May, a shade lower than the previous month (NZD +0.33bn in April). The very similar number obscures a solid increase in volumes: export volumes increased by NZD 500m and import values increased by 600m. While New Zealand’s trade situation is slipping compared to last year (the deficit of NZD 805m YTD is weaker than last year’s June deficit of NZD541), it’s worth noting that at least it is weaker on higher volumes of imports and exports (i.e. higher output and higher consumption), as opposed to lower volumes as we are seeing elsewhere.

There was little in the way from Japan to support the yen, it is simply overall market sentiment.

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

Economic Releases for June 26, 2012 actual v. forecast

Date

 

Currency

 

 

 

Event

Actual

 

Forecast

 

Previous

 

 

Jun. 27

 

EUR

 

 

 

German Import Price Index (MoM) 

-0.7%

 

-0.7% 

 

-0.5% 

 

 

 

 

EUR

 

 

 

Spanish Retail Sales (YoY) 

-4.9%

 

-8.2% 

 

-10.0% 

   

 

 

EUR

 

 

 

Italian Business Confidence 

88.9

 

85.5 

 

86.6 

   

 

 

NOK

 

 

 

Norwegian Unemployment Rate 

3.00%

 

3.00% 

 

3.00% 

 

 

 

 

GBP

 

 

 

BBA Mortgage Approvals 

30.2K

 

32.8K 

 

32.1K 

   

 

 

EUR

 

 

 

Italian 6-Month BOT Auction 

2.957%

 

 

 

2.104% 

 

 

 

 

GBP

 

 

 

CBI Distributive Trades Survey 

42

 

10 

 

21 

 

 

 

 

USD

 

 

 

MBA Mortgage Applications

-7.1%

 

 

 

-0.8% 

 

 

 

 

EUR

 

 

 

German CPI (MoM) 

-0.1%

 

0.0% 

 

-0.2% 

 

 

 

 

EUR

 

 

 

German CPI (YoY) 

1.7%

 

1.8% 

 

1.9% 

 

 

 

 

USD

 

 

 

Core Durable Goods Orders (MoM) 

0.4%

 

0.7% 

 

-0.6% 

   

 

 

USD

 

 

 

Durable Goods Orders (MoM) 

1.1%

 

0.4% 

 

-0.2% 

   
                               

 

Upcoming Economic Events that affect the AUD, NZD, JPY and USD

Date

Time

Currency

Event 

Previous

Jun 28

1:00

NZD

NBNZ Business Confidence

27.1

 

 

 

 

 

 

 

 

 

 

 

 

Jun 29

12:30

USD

Unemployment Claims

 

12:30

USD

Final GDP q/q

1.9%

22:45

NZD

Building Consents m/m

-7.2%

23:30

JPY

Household Spending y/y

2.6%

23:30

JPY

Tokyo Core CPI y/y

-0.8%

23:50

JPY

Prelim Industrial Production m/m

-0.2%

1:30

AUD

Private Sector Credit m/m

0.4%

12:30

USD

Core PCE Price Index m/m

0.1%

 

12:30

USD

Personal Spending m/m

0.3%

13:45

USD

Chicago PMI

52.7

13:55

USD

Revised UoM Consumer Sentiment

74.1

 

 

 

 

 

EUR/JPY Forecast June 27, 2012, Technical Analysis

EUR/JPY fell most of the session on Tuesday as stock markets gained but only slightly. At the end of the session however, we did form a hammer just above the 99 level, and this does look rather supportive. We aren’t expecting fireworks here, just a simple return to the recent consolidation area which extends all the way up to 101.50 or so in this market. It is hard to believe that there will be some kind of sudden breakout in this pair until after the EU summit on Thursday and Friday. Because of this, we are willing to buy very short-term in order to pick up a few pips. Otherwise, we just simply don’t see much in the trade. 

EUR/JPY Forecast June 27, 2012, Technical Analysis
EUR/JPY Forecast June 27, 2012, Technical Analysis

EUR/JPY Fundamental Analysis June 27, 2012, Forecast

Analysis and Recommendations:

The EUR/JPY this is an unusual pair to look at in today’s craziness. With the EU Summit just about to get started, the theatrics and drama along with news flow is revving up. Much Ado About Nothing. The JPY gained 0.56 to trade at 99.06

Greece appointed a new finance minister today, after the previous newly appointed finance minister resigned within a week. Greece and Germany are going at it over the re negotiation of the bailout agreement, as Greece demands an extra 20billion euros, as Germany responds, stop asking for more and more.

Japan is where the interest was today as Prime Minister Noda went heads up with the lower house over the next tax increase, doubling the consumption tax to 10% by 2015. There was a chance of a no confidence vote which would have upset the government. But there were more than enough votes, but many of Noda’s supporters did not vote in his favor, which means in a coalition government he might not have enough seats for a majority at this time.

Moody’s supported the tax saving it was a credit positive move.

The increased risk aversion theme of the markets helped give the yen renewed strength.

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

Upcoming Economic Events that affect the AUD, NZD, JPY and USD

Date

Time

Currency

Event 

Previous

Jun 27

 

 

 

 

 

 

Jun 28

12:30

USD

Durable Goods Orders m/m

0.2%

14:00

USD

Pending Home Sales m/m

-5.5%

14:30

USD

Crude Oil Inventories

 

23:50

JPY

Retail Sales y/y

5.8%

1:00

NZD

NBNZ Business Confidence

27.1

 

 

 

 

 

 

 

 

 

 

 

 

Jun 29

12:30

USD

Unemployment Claims

 

12:30

USD

Final GDP q/q

1.9%

22:45

NZD

Building Consents m/m

-7.2%

23:30

JPY

Household Spending y/y

2.6%

23:30

JPY

Tokyo Core CPI y/y

-0.8%

23:50

JPY

Prelim Industrial Production m/m

-0.2%

1:30

AUD

Private Sector Credit m/m

0.4%

12:30

USD

Core PCE Price Index m/m

0.1%

 

12:30

USD

Personal Spending m/m

0.3%

13:45

USD

Chicago PMI

52.7

13:55

USD

Revised UoM Consumer Sentiment

74.1

 

EUR/JPY Forecast June 26, 2012, Technical Analysis

The EUR/JPY pair fell as most Yen-related pairs did on Monday. The pair is a risk-related pair that many traders will follow in times of economic turmoil, and as the risk is centered on Europe, this is even more so in this situation. As long as there are problems in Europe, every time the crisis flares up, we are selling this market. The pair seems to be in a range between 99.50 and 100.50, and because of this, we are looking to get involved once we break out of this area. The pair can break down as long as the USD/JPY doesn’t meltdown. The pair is a “sell only” market, and as long as we stay under the 100.50 level, we are more comfortable selling. On a break below the 99.50 level, we are sellers as well. However, on a daily close above the 100.50 level, we are buyers as it would show another burst of momentum. 

EUR/JPY Forecast June 26, 2012, Technical Analysis
EUR/JPY Forecast June 26, 2012, Technical Analysis

EUR/JPY Fundamental Analysis June 26, 2012, Forecast

Analysis and Recommendations:

The EUR/JPY is off by 1.61 trading below the 100.00 level, at 99.50. With Spain, Greece and Italy floundering and Germany and France bickering, global leaders are pushing for more plans and action, but nothing are forth coming.

 As demands for action weigh on EU leaders, markets begin to lose confidence that this week’s EU summit will yield anything more than promises and small steps. News flow has been limited, with almost no fundamental releases in the advanced economies and no surprises from the BIS annual meeting. In this environment the markets are shedding risk, with equities in negative territory, bond yields lower (except in the vulnerable Spain and Italy) and a stronger USD and the JPY outperforming on risk aversion.

At this point investors seem to be shedding everything associated with the eurozone and moving well beyond to safe havens.

Reacting to heightened risk aversion, JPY has rallied 0.7% since Friday’s close.

This week is full of data from Japan as the island nation releases almost all their data at one time on a monthly bases, starting tomorrow we will see a great deal of eco data, but in the risk aversion mode of the markets, data may not affect the currency value.

Rumors of the BoJ introducing additional monetary policy are becoming louder.

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.

Upcoming Economic Events that affect the AUD, NZD, JPY and USD

Date

Time

Currency

Event 

Previous

Jun 26

13:00

USD

S&P/CS Composite-20 HPI y/y

-2.6%

14:00

USD

CB Consumer Confidence

64.9

22:45

NZD

Trade Balance

355M

Jun 27

 

 

 

 

 

 

Jun 28

12:30

USD

Durable Goods Orders m/m

0.2%

14:00

USD

Pending Home Sales m/m

-5.5%

14:30

USD

Crude Oil Inventories

 

23:50

JPY

Retail Sales y/y

5.8%

1:00

NZD

NBNZ Business Confidence

27.1

 

 

 

 

 

 

 

 

 

 

 

 

Jun 29

12:30

USD

Unemployment Claims

 

12:30

USD

Final GDP q/q

1.9%

22:45

NZD

Building Consents m/m

-7.2%

23:30

JPY

Household Spending y/y

2.6%

23:30

JPY

Tokyo Core CPI y/y

-0.8%

23:50

JPY

Prelim Industrial Production m/m

-0.2%

1:30

AUD

Private Sector Credit m/m

0.4%

12:30

USD

Core PCE Price Index m/m

0.1%

 

12:30

USD

Personal Spending m/m

0.3%

13:45

USD

Chicago PMI

52.7

13:55

USD

Revised UoM Consumer Sentiment

74.1

 

EUR/JPY Weekly Fundamental Analysis June 25-29, 2012, Forecast

Introduction: This is one of the most popular crosses. The primary reason why EUR/JPY has rallied 11 percent over the past 3.5 months is because of US growth – not many people realize that the price action of EUR/JPY is directly correlated with how the US economy is doing. 

According to studies, there is a strong correlation between manufacturing ISM and EUR/JPY. When manufacturing ISM had a meaningful dip below the 50 boom / bust level. This has happened more than 7 times over the past 20 years. Each time the US manufacturing sector contracted, EUR/JPY rallied. On average, from the month that ISM contracted to the month that ISM moved back above 50, EUR/JPY rallied 314 pips. 

Weekly Analysis and Recommendations:

The EUR/JPY closed the week at 101.11 adding 0.44 this session. The pair had been falling all week on the weakness of the euro and the risk aversion themes of the market. On Friday the euro was able to gain some steam on positive news from the ECB, and the EU.

The ECB decided to reduce its collateral requirements for banks, thus helping with liquidity. And Italy, France and Spain announced that they would push a new growth plan for the EU and a fund of 130billion euros to help foster growth.

The Japanese yen fell against the euro as well as the USD, as investors are weary about the upcoming BoJ meeting and additional easing.

Japan issues its major monthly economic releases.  Japanese industrial production is expected to post the sharpest month-over-month decline in over a year while the highest frequency inflation gauges for Tokyo are expected to post ongoing deflation in both headline and core prices excluding food and energy. Retail sales, total household spending, housing starts, and the jobless rate will round out the broad picture for the Japanese economy.

The fundamentals calendar is fairly lightly populated and focused upon German CPI and unemployment, Eurozone CPI, EC economic and industrial confidence, and UK and French GDP revisions. Italy auctions bonds on the heels of Spain’s successful auctions but in advance of the critical EU Summit which may put the auctions at greater risk of pre-Summit comments and volatility. The EuroFin Summit will be the main event for this pair.

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 19-23, 2012 actual v. forecast

Date

Time

 

Currency

 

Importance

 

Event

Actual

 

Forecast

 

Previous

 

 

Jun. 19

02:30

 

AUD

 

 

 

Monetary Policy Meeting Minutes 

 

 

 

 

 

 

 

 

10:00

 

EUR

 

 

 

German ZEW Economic Sentiment 

-16.9

 

4.0 

 

10.8 

 

 

Jun. 20

09:30

 

GBP

 

 

 

Claimant Count Change 

8.1K

 

-3.0K 

 

-12.8K 

   

 

17:30

 

USD

 

 

 

Interest Rate Decision 

0.25%

 

0.25% 

 

0.25% 

 

 

 

19:15

 

USD

 

 

 

Fed Chairman Bernanke Speaks 

 

 

 

 

 

 

 

 

23:45

 

NZD

 

 

 

GDP (QoQ) 

1.1%

 

0.5% 

 

0.4% 

   

Jun. 21

09:30

 

GBP

 

 

 

Retail Sales (MoM) 

1.4%

 

1.2% 

 

-2.4% 

   

 

13:30

 

CAD

 

 

 

Core Retail Sales (MoM) 

-0.3%

 

0.2% 

 

0.3% 

   

 

13:30

 

USD

 

 

 

Initial Jobless Claims 

387K

 

380K 

 

389K 

   

 

15:00

 

USD

 

 

 

Existing Home Sales 

4.55M

 

4.57M 

 

4.62M 

 

 

Jun. 22

09:00

 

EUR

 

 

 

German Ifo Business Climate Index 

105.3

 

105.9 

 

106.9 

 

 

 

13:30

 

CAD

 

 

 

Core CPI (MoM) 

0.2%

 

0.3% 

 

0.4% 

 

 

 Historical:

 Highest: 156.83 JPY on Sep 22, 2008

 Average: 118.28 JPY over this period.

 Lowest: 95.61JPY on Jun 01, 2012

  

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

Date

Time

Currency

Event 

Previous

Jun 25

14:00

USD

New Home Sales

343K

Jun 26

13:00

USD

S&P/CS Composite-20 HPI y/y

-2.6%

14:00

USD

CB Consumer Confidence

64.9

22:45

NZD

Trade Balance

355M

Jun 27

 

 

12:30

USD

Durable Goods Orders m/m

0.2%

14:00

USD

Pending Home Sales m/m

-5.5%

14:30

USD

Crude Oil Inventories

 

EUR/JPY Forecast June 25, 2012, Technical Analysis

The EUR/JPY pair rose during the Friday session in order to break the 101 level. The candle from Thursday is a shooting star, and is based right at the 50% Fibonacci retracement level. Because of this, we think a break above Thursday’s highs would be an excellent buy signal. However, we don’t like buying the euro in general. We suspect that this has more to do with the Japanese yen than anything else. There is a meeting in Europe late this week that could move the euro in general. If the leaders in Europe managed to come up with something substantive, there is a possibility that this pair moves higher. Because of this, we have to respect a break above the 102 level.

EUR/JPY Forecast June 25, 2012, Technical Analysis
EUR/JPY Forecast June 25, 2012, Technical Analysis

EUR/JPY Forecast for the Week of June 25, 2012, Technical Analysis

The EUR/JPY pair had a slightly bullish week after initially falling. This formed a hammer that sits just above the 100 level, and this does in fact look relatively positive. However, will we all know that there is an extraordinary amount of headline risks when it comes to Europe and by extension the euro. Because of this, we are very hesitant to go long unless we see a weekly close above the top of this week’s candle. This could possibly be a nice long-term trade, but in order for this to be true, we expect that we need to see something substantial out of the European meetings later this week. We would buy though, on a break of the top of the weekly candle.

EUR/JPY Forecast for the Week of June 25, 2012, Technical Analysis
EUR/JPY Forecast for the Week of June 25, 2012, Technical Analysis

EUR/JPY Forecast June 22, 2012, Technical Analysis

The EUR/JPY pair attempted to rally during the Thursday session, but fell back down to form a shooting star. More interestingly, the candle formed is a shooting star just above the 100 level. Because of this, we think that this market will fall back down, and would sell on a break of the bottom of the session for Thursday. The market has been in a long term downtrend at this point, and a fall back to previous lows is very possible. The market is a “sell only” one at this point, and as long as the USD/JPY doesn’t sell off aggressively, this market should be left alone by the Bank of Japan and continue to fall.

 

EUR/JPY Forecast June 22, 2012, Technical Analysis
EUR/JPY Forecast June 22, 2012, Technical Analysis