USD/JPY Fundamental Analysis Jan. 26, 2012, Forecast

Economic Events: (GMT)

Close of the Asian Markets

13:30     USD     Core Durable Goods Orders (MoM)     0.9%     0.3%

13:30     USD     Durable Goods Orders (MoM)     2.0%     3.7%

Durable Goods Orders measures the change in the total value of new orders for long lasting manufactured goods, excluding transportation items. Because aircraft orders are very volatile, the core number gives a better gauge of ordering trends. A higher reading indicates increased manufacturing activity.

A higher than expected reading should be taken as positive/bullish for the USD, while a lower than expected reading should be taken as negative/bearish for the USD.

 13:30    USD     Initial Jobless Claims     370K     352K

 13:30    USD     Continuing Jobless Claims     3432K

Initial Jobless Claims measures the number of individuals who filed for unemployment insurance for the first time during the past week. This is the earliest U.S. economic data, but the market impact varies from week to week. Continuing Jobless Claims measures the number of unemployed individuals who qualify for benefits under unemployment insurance.

A higher than expected reading should be taken as negative/bearish for the USD, while a lower than expected reading should be taken as positive/bullish for the USD.

15:00     USD     New Home Sales     320K     315K

New Home Sales measures the annualized number of new single-family homes that were sold during the previous month. This report tends to have more impact when it’s released ahead of Existing Home Sales because the reports are tightly correlated.

A higher than expected reading should be taken as positive/bullish for the USD, while a lower than expected reading should be taken as negative/bearish for the USD.

 23:30    JPY     Tokyo Core CPI (YoY)     -0.3%     -0.3%

The Tokyo Core Consumer Price Index (CPI) measures the change in the price of goods and services purchased by consumers in Tokyo, excluding fresh food.

A higher than expected reading should be taken as positive/bullish for the JPY, while a lower than expected reading should be taken as negative/bearish for the JPY.

 23:50    JPY     Monetary Policy Meeting Minutes

The Monetary Policy Meeting Minutes are a detailed record of the Bank of Japan’s policy setting meeting, containing in-depth insights into the economic conditions that influenced the decision on where to set interest rates.

 23:50    JPY     Retail Sales (YoY)     2.0%     -2.2%

Retail Sales measure the change in the total value of inflation-adjusted sales at the retail level. It is the foremost indicator of consumer spending, which accounts for the majority of overall economic activity.

A higher than expected reading should be taken as positive/bullish for the JPY, while a lower than expected reading should be taken as negative/bearish for the JPY.

Analysis and Recommendation:

USD/JPY was trading 77.88.

The dollar rose as high as 77.98 yen during the session, compared with ¥77.74 late Tuesday and ¥77.02

Reports released earlier in the day showed Japan recorded an annual trade deficit in 2011, its first since 1980. The point at which Japan’s savings turn around in terms of momentum has long been seen as the time to sell the Japanese yen.

The BoJ also reported negative effects in the Japanese economy and stated that it would be a longer turn around cutting growth rates. The yen will continue to fall against the USD.

Markets in Hong Kong, Taipei and Shanghai, among others, remained closed for the Lunar New Year holidays.
 

Upcoming Govt Bond Sales Dates

Jan 26  10:10  Italy   Auctions CTZ/BTPei

Jan 26  18:00  US  Auctions 7Y Notes

Jan 27  10:10  Italy   BOT auction

USD/JPY Forecast January 25, 2012, Technical Analysis

USD/JPY shot straight up during the Tuesday session as traders took on a bit more risk in the Yen related markets. The pair is still in a massive downtrend, and the area it slammed into for the session is still massive resistance. The pair cannot be bought at this point as surely there will be sellers willing to come into the market at this point, and the trend is against you. The 78.25 level has been very resistive lately, and nothing in this chart suggests that it is about to give way. Because of this, we are willing to fade this rally unless the daily chart can somehow close above the 80 mark, which would mark a significant and long-term change.

USD/JPY Forecast January 25, 2012, Technical Analysis
USD/JPY Forecast January 25, 2012, Technical Analysis

USD/JPY Fundamental Analysis Jan. 25, 2012, Forecast

Economic Events: (GMT)

Close of the Asian Markets

00:30     AUD      CPI (QoQ)                        0.2%                      0.6%

The Consumer Price Index (CPI) measures the change in the price of goods and services from the perspective of the consumer. It is a key way to measure changes in purchasing trends and inflation.

A higher than expected reading should be taken as positive/bullish for the AUD, while a lower than expected reading should be taken as negative/bearish for the AUD.

 00:30    AUD      Trimmed Mean CPI (QoQ)           0.6%                      0.3%

The Trimmed Mean Consumer Price Index (CPI) measures the change in the price of goods and services purchased by consumers, excluding the most volatile 30% of items. This data helps illustrate underlying inflation trends.

A higher than expected reading should be taken as positive/bullish for the AUD, while a lower than expected reading should be taken as negative/bearish for the AUD.

05:00    JPY        BoJ Monthly Report

The Bank of Japan’s (BoJ) monthly report contains the statistical data that policymakers evaluate when setting interest rates. The report also provides detailed analysis of current and future economic conditions from the bank’s perspective.

20:00     NZD       Interest Rate Decision                  2.50%                   2.50%

 20:00    NZD       RBNZ Rate Statement

The Reserve Bank of New Zealand (RBNZ) governor decides where to set the rate after consulting senior bank staff and external advisers. Traders watch interest rate changes closely as short term interest rates are the primary factor in currency valuation.

The Reserve Bank of New Zealand’s rate statement is the primary tool the panel uses to communicate with investors about monetary policy. It contains the outcome of the vote on interest rates, discusses the economic outlook and offers clues on the outcome of future votes.

A higher than expected rate is positive/bullish for the NZD, while a lower than expected rate is negative/bearish for the NZD.

23:00     KRW      South Korean GDP (QoQ)              0.4%                     0.8%

Gross Domestic Product (GDP) measures the annualized change in the inflation-adjusted value of all goods and services produced by the economy. It is the broadest measure of economic activity and the primary indicator of the economy’s health.

A higher than expected reading should be taken as positive/bullish for the KRW, while a lower than expected reading should be taken as negative/bearish for the KRW.

Analysis and Recommendation:

USD/JPY was trading 77.02 virtually unchanged. The pair is expected to remain trading in tandem for the next day of so.  The dollar might pick up some energy after reports in the US, but today will be all about Greece. Investors are wary and stressed over the deal or no deal. It is vitally important to the EU and Greece to announce a firm agreement today.

This morning the Bank of Japan issued the following statement; ( I have edited and highllighted the important information )

The Bank of Japan will encourage the uncollateralized overnight call rate to remain at around

0 to 0.1 percent.

Japan’s economic activity has been more or less flat, mainly due to the effects of a slowdown in overseas economies and the appreciation of the yen. As for domestic demand, business fixed investment has been on a moderate increasing trend and private consumption has remained firm. On the other hand, exports and production have remained more or less flat, due to the slowdown in overseas economies and the yen’s appreciation as well as the remaining effects of the flooding in Thailand.

The markets remain under heavy strain, financial conditions in Japan have continued to ease.

The year-on-year rate of change in the CPI (all items less fresh food) is around 0 percent. As for the outlook, Japan’s economic activity will remain more or less flat for the time being. After that, the economy is expected to return to a moderate recovery path as the pace of recovery in overseas economies picks up, led by emerging and commodity-exporting economies, and reconstruction-related demand after the earthquake disaster gradually materializes.

The year-on-year rate of change in the CPI is expected to remain at around 0.

Upcoming Govt Bond Sales Dates

Jan 25  10:10  Sweden  Nominal bond auction

Jan 25  10:30  Germany  Eur 3.0bn 3.25% Jul 2042 Bund

Jan 25  16:30  Italy   Details BTP/CCTeu on Jan 30

Jan 25  18:00  US  Auctions 5Y Notes

Jan 26  10:10  Italy   Auctions CTZ/BTPei

Jan 26  18:00  US  Auctions 7Y Notes

Jan 27  10:10  Italy   BOT auction

USD/JPY Forecast January 24, 2012, Technical Analysis

USD/JPY continues to lull traders to sleep as it goes sideways in a roughly 70 pip range over the last several sessions. Monday saw more of the same, and formed a doji. While there really isn’t much to do in this pair at the moment, it is worth watching as there are some definitive areas to watch. The 76.50 level should continue to be support, and if it gives way, there is a chance that you will see the Bank of Japan get involved in the currency markets again. The 78.25 should be thought of as the absolute top in the recent ranges, and the 80 level is the absolute top in this market currently. The 80 will be hard to break free of, but if the market does – it will be a long term buy and hold pair. If the 78.25 level shows weakness we could fade the rally and expect to see a return to the current areas.

USD/JPY Forecast January 24, 2012, Technical Analysis
USD/JPY Forecast January 24, 2012, Technical Analysis

USD/JPY Forecast Jan. 24, 2012, Fundamental Analysis

USD/JPY Forecast Jan. 24, 2012, Fundamental Analysis
USD/JPY Forecast Jan. 24, 2012, Fundamental Analysis
The USD/JPY pair started the week within a narrow range trading but was biased to the upside, where the current market sentiment is generally still positive which added more pressure on the Japanese yen.

The US dollar is starting a busy week with the FOMC decision regarding in addition to the fourth quarter GDP, in which the dollar will determine its next move depending on the risk trend.

On the other hand, markets await the BOJ decision as well, as the yen traded in a narrow range with the beginning of the week, while any new action from the BOJ will have its toll on the Japanese currency.

The current market sentiment still supports the risk appetite, but we can say that investors are keeping their decisions on hold until the picture become clear after the central banks take their decisions.

On Tuesday at 04:00 GMT, the Bank of Japan will conclude its first meeting this year, where it’s expected that the BOJ will keep its interest rate unchanged while the stimulus programs could witness some adjustments.

At 15:00 GMT, the U.S. economy will issue the Richmond Fed Manufacturing Index for January, where it’s expected at 5.0 from the previous reading of 3.0.

Greece Conflict Effects Asia

Asian markets moved very little during Monday’s trading session.  Australian share markets lost 0.1% to 4233.50 after gaining all year, Australia is actually up over 4% for the New Year, making quiet gains. Most of the markets just seemed to drift today. Many are closed for the Lunar New Year including Shanghai, Hong Kong and Seoul.

The Nikkei rose 0.2% in a quiet trading session. Asian markets got what little life they exhibited today from the bounce in US markets on Friday.

With little in the way of economic news and data out today and the lower volume due to the holiday, the markets were lax.

All eyes and ears were waiting for news on the Greece situation. As of this morning, there has been no verifiable agreement reached between the Greek government and the IIF, representing the banks and major creditors. The original deadline to reach an agreement to avoid default was this past Friday, when no deal was reached both parties stated that they were going to continue talks over the weekend via phone. At this moment, there have been lost of conflicting reports and rumors, but no hard news on a final deal.

This morning’s deadline was set to present the final deal to the EU and ECB at their meeting today.

Reuters reported last evening “Greece and private creditors neared a debt swap deal which would prevent Athens from bankruptcy and have investors lose up to 70 percent of the loans they have given to the country. But many details were still unresolved and the plan must be approved by the International Monetary Fund and others.

Euro zone finance ministers will decide on Monday what terms of a Greek debt restructuring they are ready to accept as part of a second bailout package for Athens.”

In Monday’s Asian session, most of the currencies including the yen, aussie and the kiwi remained in tight ranges, just sitting and waiting.

Last week we saw the euro pick up some strength and rise almost back to the all important 1.30 level, making it as high as 1.2986 before losing the battle. On Friday as investors grew weary and amongst some profits taking the euro declined and the USD picked up steam. Many investors ran for the safety of gold pushing gold up by 10.00 on the close of the week end at 1664.50.

Today we might expect statements from the EU, the ECB and the IMF but it does not look like a deal will be struck without some incentives added, perhaps a Greek default is possible.

USD/JPY Fundamental Analysis Jan. 24, 2012, Forecast

Economic Events: (GMT)

Close of the Asian Markets

Jan. 24                 

JPY Interest Rate Decision 0.10% 0.10%

JPY BoJ Press Conference

Bank of Japan (BOJ) policy board members come to a consensus on where to set the rate. Traders watch interest rate changes closely as short term interest rates are the primary factor in currency valuation. The Bank of Japan (BOJ) press conference looks at the factors that affected the most recent interest rate decision, the overall economic outlook, inflation and offers insights into future monetary policy decisions.

A higher than expected rate is positive/bullish for the JPY, while a lower than expected rate is negative/bearish for the JPY.

23:50 JPY Trade Balance 0.36T 0.54T

The Trade Balance measures the difference in value between imported and exported goods and services over the reported period. A positive number indicates that more goods and services were exported than imported.

A higher than expected reading should be taken as positive/bullish for the JPY, while a lower than expected reading should be taken as negative/bearish for the JPY.

Analysis and Recommendation:

USD/JPY was trading 77.05 with the USD edging up against the Japanese Yen in Asian trading.

The Japanese yen lifted from 77.29 yen per US dollar to JPY76.91, and closed US trade near JPY76.94. on Friday.

The pair continue to trade in a close range, with the USD showing some strenght continuing from US trading on Friday.

There are several financial and economic reports due out in the US which should give the greenback a push upwards but for today and tomorrow expect the duo to trade between last weeks 76.91 and today’s high of 77.08.

Upcoming Govt Bond Sales Dates

Jan 23 
12:00  Norway  Details bond auction on Jan 30

Jan 24 
09:30  Netherlands Eur 1.5-2.5bn Jan 2013 & Jan 2042 DSL

09:30  Spain  Auctions 3 & 6M T-bills

16:30  Italy   Details CTZ/BTPei on Jan 26 & BOT on Jan 27 &

18:00  US  Auctions 2Y Notes

Jan 25 
10:10  Sweden  Nominal bond auction

10:30  Germany  Eur 3.0bn 3.25% Jul 2042 Bund

16:30  Italy   Details BTP/CCTeu on Jan 30

18:00  US  Auctions 5Y Notes

Jan 26 
10:10  Italy   Auctions CTZ/BTPei

18:00  US  Auctions 7Y Notes

Jan 27 
10:10  Italy   BOT auction

USD/JPY Forecast January 23, 2012, Technical Analysis

The USD/JPY pair fell on Friday to remain in the tight range it has been sitting in for two weeks. The pair is simply “stuck”, but this only confirms the “boundaries” of which the short-term trader can trade in. The selling of a break of the Friday candle would be a play to reach the lows of the consolidation again, and something we are interested in doing. Of course, we are only aiming for about 30 pips or so as there is massive support at 76.50 or so. Because of this, we might as well take advantage of the back and forth tight range we are in currently!

USD/JPY Forecast January 23, 2012, Technical Analysis
USD/JPY Forecast January 23, 2012, Technical Analysis

USD/JPY Forecast for the Week of January 23, 2012, Technical Analysis

USD/JPY is currently sitting still, and with the Bank of Japan sitting just below the current levels, this pair simply cannot find any real traction to fall lower. However, the upside seems to be limited as well, as the 0.80 level is massive resistance. The pressure is certainly to the downside, and this looks set to continue going forward. The 0.80 level mentioned above has to be broken in order for the long-term trader to get involved, as the downside is protected by the BoJ. Because of this, we consider the USD/JPY pair a scalpers only market.

USD/JPY Forecast for the Week of January 23, 2012, Technical Analysis
USD/JPY Forecast for the Week of January 23, 2012, Technical Analysis

USD/JPY Weekly Fundamental Analysis Jan. 23-27, 2012, Forecast

Economic Events:  (GMT)

Jan. 24
03:00 JPY Interest Rate Decision
07:00 JPY BoJ Press Conference
15:00 USD CB Consumer Confidence
Jan. 25
15:00 USD Pending Home Sales (MoM)
19:15 USD Interest Rate Decision
19:15 USD FOMC Statement
Jan. 26
05:00 JPY BoJ Monthly Report
13:30 USD Core Durable Goods Orders (MoM)
13:30 USD Durable Goods Orders (MoM)
13:30 USD Initial Jobless Claims
13:30 USD Continuing Jobless Claims
15:00 USD New Home Sales
23:50 JPY Monetary Policy Meeting Minutes
23:50 JPY Retail Sales (YoY)
Jan. 27
13:30 USD GDP Price Index (QoQ)
13:30 USD GDP (QoQ)

Please review the daily forecast for explainations and expected results

Rule:

The USD/JPY foreign currency exchange rate is the price of one U.S. dollar – the base currency – in terms of Japanese yen – the quote currency. For example, a bid/ask quote of 89.29/89.32 means that one U.S. dollar can be bought for 89.32 yen and one U.S. dollar can be sold at 89.29 yen.

If the U.S. dollar is expected to appreciate against the yen, then the above quote might rise to say, 89.73/89.76. The forex strategy in this case would be to buy USD/JPY. If, on the other hand, the U.S. dollar is expected to depreciate against the yen, then the above quote might fall to say, 88.68/88.71. The forex strategy in this case would be to sell USD/JPY.

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.

Daily range average : 80-90 pips
Best time to trade: Asian Session (2400 GMT – 0900 GMT)
Some factors affecting the USD/JPY rate:

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

 

Analysis and Recommendation:

The USD/JPY was on the upside for the week, closing the week at 77.02.

On the local side, the BoJ has downgraded its assessment of the local economic conditions in seven of nine regions in Japan in January from three months earlier. Also a government minister commented in view of the recent downgrades by S&P, Japan could be next.

The USD was up and down all week, with positive jobs reports and negative housing data, but moved up against all currencies when the euro reached an unexpected high and traders began selling it off to take profits, pushing the dollar up on Friday.

The entire week seemed to be focused on Greece and the negotiations with the IIF representatives as deadlines approached. The were rumors flying in every direction, moving the markets but at the close of day Friday no deal had been reached and the IIF representatives packed up and went home stating the negotiations would continue over the week by phone.

The pair is expected to continue to the upside in the beginning of the week, there are several economic reports due early that could effect the markets, but the main event is the EU and Greece, news, rumor, truth or fiction, will move the markets.

Keep an eye on Gold, as it surged on Friday as investors moved to safe-havens. This week will be about safety and risk appetite.

Upcoming Govt Bond Sales Dates

Jan 23  10:10  Norway  Nok 6.0bn 4.25% May 2017 bond

Jan 23  10:10  Slovakia  Auctions Apr 2014 bond

Jan 23  10:30  Germany  Eur 3.0bn Jan 2013 Bubill

Jan 23  12:00  Norway  Details bond auction on Jan 30

Jan 24  09:30  Netherlands Eur 1.5-2.5bn Jan 2013 & Jan 2042 DSL

Jan 24  09:30  Spain  Auctions 3 & 6M T-bills

Jan 24  16:30  Italy   Details CTZ/BTPei on Jan 26 & BOT on Jan 27 &

Jan 24  18:00  US  Auctions 2Y Notes

Jan 25  10:10  Sweden  Nominal bond auction

Jan 25  10:30  Germany  Eur 3.0bn 3.25% Jul 2042 Bund

Jan 25  16:30  Italy   Details BTP/CCTeu on Jan 30

Jan 25  18:00  US  Auctions 5Y Notes

Jan 26  10:10  Italy   Auctions CTZ/BTPei

Jan 26  18:00  US  Auctions 7Y Notes

Jan 27  10:10  Italy   BOT auction

USD/JPY Forecast Jan. 23, 2012, Fundamental Analysis

USD/JPY Forecast Jan. 23, 2012, Fundamental Analysis
USD/JPY Forecast Jan. 23, 2012, Fundamental Analysis
The USD/JPY pair ended last week with gains, where the pair was able correct to the upside with the improved sentiment in the market that eased haven demand, easing pressure on the Bank of Japan which will announce its rate decision this week.

The current sentiment is supporting the risk appetite where the latest macroeconomic data and eased fears over Europe’s outlook supported the unwinding of pessimism and reduced demand for safe haven currencies.

The USD/JPY pair is expected to continue the upside short-term trend, while any intervention from the BOJ will have its toll on the pair’s movements and could easily confirm the upside move over the mid-term.

On Monday, both economies will not release any fundamentals, where the pair’s movements will depend on the market sentiment.

USD/JPY Weekly Forecast Jan. 23-27, 2012, Fundamental Analysis

USD/JPY Weekly Forecast Jan. 23-27, 2012, Fundamental Analysis
USD/JPY Weekly Forecast Jan. 23-27, 2012, Fundamental Analysis
The USD/JPY pair advanced to its highest level in three weeks, as the risk appetite dominated the FX market with good global macroeconomic data and eased worries over the outlook for Europe with successful bond sales.

Investors returned to take some risk sending major equity indices to record more gains, while safe haven currencies paid the price and dropped against other majors.

The current market sentiment shifted to riskier assets, as the recent data from the U.S. economy and China supported the idea that the ongoing recovery in the major economies will balance the negative affect of the EU debt crisis.

The Bank of Japan will announce its interest rate decision with the beginning of the week, where the central bank will be happy with current drop in the Japanese currency, while the ongoing EU debt crisis and uncertain outlook for the global economy will keep the BoJ cautious.

Also the Federal Reserve Bank will announce its FOMC decision, with expectations of further stability in the bank’s monetary policy especially after the unexpected performance of the manufacturing sector in addition to stable inflation pressures.

The USD/JPY pair is expected to continue the upside over the short-term, while any intervention from the BoJ will have its toll on the pair’s movements and could easily confirm the upside move over the coming period.

Major highlights for this week that will affect the USD/JPY pair’s trading:

Monday January 23:

On Monday, both economies will not release any fundamentals, where the pair’s movements will depend on the market sentiment.

Tuesday January 24:

On Tuesday at 04:00 GMT, the Bank of Japan will conclude its first meeting this year, where it’s expected that the BOJ will keep its interest rate unchanged while the stimulus programs could witness some adjustments.

At 15:00 GMT, the U.S. economy will issue the Richmond Fed Manufacturing Index for January, where it’s expected at 5.0 from the previous reading of 3.0.

Wednesday January 25:

On Wednesday at 23:50 GMT (Tuesday), Japan will release the Merchandise Trade Balance for December, where it’s expected to show a deficit of 154.9 billion yen narrowing from the previous deficit of 684.7 billion yen.

The Adjusted Merchandise Trade Balance is expected to show a deficit of 376.5 billion yen also narrowing from the previous deficit of 537.9 billion yen.

Exports are expected with 7.4% drop on the year deepening the drop from the previous month when it fell 4.5%. Imports are expected with 8.0% rise after 11.4% rise the previous month.

The U.S. economy will report the House Price Index for November which had a previous reading of –0.2%. On the other hand, the Pending Home Sales for December is expected with 1.0% rise slowing from the previous month’s surge of 7.3%.

At 17:30 GMT, the Federal Reserve Bank will announce its Open Market Committee monetary decision, where it’s expected that the central bank will keep its interest rate near zero and the monetary policy unchanged.

Thursday January 26:

On Thursday at 13:30 GMT, the U.S. economy will release the Durable Goods Orders for December, where it’s expected at 2.0% from the prior reading of 3.8%. While the Durables Exclude Transportation had a previous reading of 0.3% expected at 1.0%.

At 13:30 GMT, the U.S. economy will release the weekly initial claims numbers, where the number of people filing for first-time claims for the state unemployment insurance dropped to 352 thousand last week.

The U.S. Leading Indicators for December will be released at 15:00 GMT, with a previous reading of 0.5% and expected to come at 0.7%.

On the other hand, the New Home Sales for December is expected to come at 1.6% in line with the prior reading.

Friday January 27:

On Friday at 23:30 GMT (Thursday), Japan will release the National Consumer Price Index for December, where it’s expected to drop 0.2% from the prior reading of –0.5%, while the National Consumer Price Index excluding fresh food is expected to come at -0.1% from –0.2%.

At 23:50 GMT, the Japanese Retail Trade for December will be released with a prior reading of 0.4% and expected to come at -2.1%, while the annual reading has a prior reading of –2.3% and expected to come at 0.4%.

The U.S. economy will release the annualized Gross Domestic Product for the fourth quarter at 13:30 GMT, where the U.S. economy is expected to have expanded at a stronger pace of 3.0% from the previous 1.8%.

The Core Personal Consumption Expenditure for the fourth quarter is expected to come at 0.9% from the previous 2.1%, while the fourth quarter Personal Consumption is expected to come at 2.3% from the previous 1.7%.

The University of Michigan Confidence for January will be released at 14:55 GMT, with a previous reading of 74 and expected to be revised slightly to 73.9.

Markets Witness Mixed Trading after IMF Cuts Global Growth for 2012

US dollar managed to incline against most of major currencies as a report came from The Daily Telegraph today saying that the IMF will downgrade the global growth outlook for 2012 to 3.3% from 4.0%.

The IMF sees a 2.2 percent contraction for Italy and a 1.7 percent growth decline for Spain, as economies are weighed down by fiscal austerity measures, The IMF also urged the European Central Bank to boost liquidity to stave off a deeper Euro zone crisis.

While on the other hand, some major companies and banks in U.S announced their earnings reports for the fourth quarter, where Google and General Electric failed to reach markets expectations, affecting the performance of Stocks during Friday’s session.

In Europe, CAC 40 dropped nearly 0.04%, while DAX inclined by 0.14%, while in US, Dow Jones rose nearly 0.23%, S&P 500 dropped by 0.32%, and NASDAQ declined by 0.34%.

In Currencies market, the euro declined against USD trading around $1.2909 compared with opening levels at $1.2967, as demand for Euro decreased today, while the pound rose trading at $1.5517.

The USD gained some momentum today trading around the 80.28 level, while the USD/YEN pair inclined to trade at 77.13. The AUD/USD pair jumped trading around the 1.0457, where gold dropped trading around $1653.24, and oil declined also trading at $100.29.

USD/JPY Fundamental Analysis Jan. 23, 2012, Forecast

Close of the Asian Session

Economic Events: (GMT)

Chinese Markets are closed for the Lunar New Year

Jan. 22  18:50   JPY Trade Balance

The Trade Balance measures the difference in value between imported and exported goods and services over the reported period. A positive number indicates that more goods and services were exported than imported.

A higher than expected reading should be taken as positive/bullish for the JPY, while a lower than expected reading should be taken as negative/bearish for the JPY.

19:30 AUD PPI (QoQ)

The Producer Price Index (PPI) measures the change in the price of goods sold by manufacturers. It is a leading indicator of consumer price inflation, which accounts for the majority of overall inflation.

A higher than expected reading should be taken as positive/bullish for the AUD, while a lower than expected reading should be taken as negative/bearish for the AUD.

Jan. 23  22:00 JPY Interest Rate Decision

Bank of Japan (BOJ) policy board members come to a consensus on where to set the rate. Traders watch interest rate changes closely as short term interest rates are the primary factor in currency valuation.

A higher than expected rate is positive/bullish for the JPY, while a lower than expected rate is negative/bearish for the JPY.

Analysis and Recommendation:

USD/JPY was trading 77.13 with the USD lower against the Japanese Yen on Friday

The pair seem to be in hibernation this week. What little life they have shown has been in reaction of EU, and the greenbacks overall market activity. The BoJ is scheduled to make a statement on Monday, but no changes are expected. The policy decision is forecast to be a hold.

Upcoming Govt Bond Sales Dates

Jan 23  10:10  Norway  Nok 6.0bn 4.25% May 2017 bond

Jan 23  10:10  Slovakia  Auctions Apr 2014 bond

Jan 23  10:30  Germany  Eur 3.0bn Jan 2013 Bubill

Jan 23  12:00  Norway  Details bond auction on Jan 30

Jan 24  09:30  Netherlands Eur 1.5-2.5bn Jan 2013 & Jan 2042 DSL

Jan 24  09:30  Spain  Auctions 3 & 6M T-bills

Jan 24  16:30  Italy   Details CTZ/BTPei on Jan 26 & BOT on Jan 27 &

Jan 24  18:00  US  Auctions 2Y Notes

Jan 25  10:10  Sweden  Nominal bond auction

Jan 25  10:30  Germany  Eur 3.0bn 3.25% Jul 2042 Bund

Jan 25  16:30  Italy   Details BTP/CCTeu on Jan 30

Jan 25  18:00  US  Auctions 5Y Notes

Jan 26  10:10  Italy   Auctions CTZ/BTPei

Jan 26  18:00  US  Auctions 7Y Notes

Jan 27  10:10  Italy   BOT auction

USD/JPY Forecast January 20, 2012, Technical Analysis

USD/JPY rose during the session as the risk appetite in the markets overall improved. The level that the pair rose from is massive support, and the pair reacted as we had anticipated. The real question is going to be whether or not it can continue to gain going forward. The pressure to the downside is significant, and as a result we are somewhat cautious going long unless it is closer to 76.50 where we feel the Bank of Japan starts to pay attention. In this pattern though, we are willing to buy pullbacks on a shorter-term charts. We will not sell at this point in time.

USD/JPY Forecast January 20, 2012, Technical Analysis
USD/JPY Forecast January 20, 2012, Technical Analysis

Markets Filled with Optimism after Upbeat U.S Jobless Claims

Markets faced a cheerful trading after the upbeat jobless claims, as the number of Americans filing for unemployment insurances dropped by 50 thousand to 352 thousand last week, from a revised 402 thousand, the lowest in almost four year and beating analysts’ median estimates of 384 thousand. noting that markets were filled with optimism after the Spanish and French auction which came better than they targeted, .

The sentiment improved in the market today after the Spanish and French bond auctions, as Spain sold 3.009 billion Euros of 5.85% 2022 bonds, on an average yield of 5.403%, compared with the previous of 6.975% recorded in the November auction. Demand for these bonds was 2.17 times the quantity offered compared with 1.54 times an auction earlier.

In Europe, CAC 40 jumped 1.96%, while DAX inclined by 0.97%, while in US, Dow Jones rose nearly 0.25%, S&P 500 inclined by 0.49%, and NASDAQ rose by 0.80%.

In Currencies market, the euro inclined against USD trading around $1.2923 compared with opening levels at $1.2862, as demand for higher yielding assets increased somehow, while the pound rose trading at $1.5473.

The USD lost the momentum today trading around the 80.23 level, while the USD/YEN pair inclined to trade at 77.20. The AUD/USD pair declined trading around the 1.0404, where gold dropped trading around $1652.95, and oil declined also trading at $100.75.

USD/JPY Forecast Jan. 20, 2012, Fundamental Analysis

USD/JPY Forecast Jan. 20, 2012, Fundamental Analysis
USD/JPY Forecast Jan. 20, 2012, Fundamental Analysis
The USD/JPY pair traded within the same range that dominated the pair’s movements in three weeks, where both the dollar and the Japanese yen are still losing grounds against other majors.

The Japanese yen retreated against the euro and higher-yielding currencies sue to the risk appetite that returned to the financial market.

On the other hand, the greenback maintained its two days decline against its major counterparts, where sings of recovery from the U.S. economy supported confidence between investors which reduced demand for safe haven currencies.

Rumors that the IMF is about to increase its resources by $600 billion in order to help the fight against the debt crisis supported the euro to record more gains against the dollar, while the rally in the Asian stocks helped restore confidence in the global market.

On Friday at 04:30 GMT, the Japanese economy will release the All Industry Activity Index for November, where the prior reading was 0.80% and it’s expected to come at –0.9%.

At 05:00 GMT, Japan will issue the Coincident Index for November, where the previous reading was 90.3; on the other hand the Leading Index for November had a prior reading of 92.9.

The U.S. economy will report the Existing Home Sales for December, where it’s expected with 3.7% rise to 4.65 million from 4.42 million.

Euro advances on IMF and Greece, ahead of France’s and Spain’s bond auctions

Markets are rising quietly ahead of the France’s and Spain’s bond auctions on hopes Greece will soon reach an agreement with bondholders while the International Monetary Fund considers expanding its lending resources to help the euro-zone countries fight the debt crisis.

The IMF is seeking to expand its lending resources by $500 billion yet the U.S. and other countries rejected the idea, considering that the Europe must solve this problem with its own money. Meanwhile Greece might reach an agreement with bondholders over the size of the losses to avoid a messy default.

The upbeat earnings report from Goldman Sachs and EBay helped keep sentiment positive, while earnings from Bank of America, Morgan Stanly, Google, Microsoft and Intel will keep investors cautious, especially after the New York based Kodak filed for bankruptcy as consumers turned from film to digital technology.

Asian stocks advance today on IMF and China, as world’s 2nd largest economy considers easing the capital requirements and is letting its five biggest banks boost lending to avoid hard landing risks. Nikkei 225 rose 1.04% yet the S&P/ASX 200 fell 0.07% after Australia’s employment unexpectedly fell in Dec.

In Europe shares advanced on Greece and IMF hopes ahead of the France’s and Spain’s long-dated bond auctions. Portugal’s yields fell yesterday after a successful auction easing some of the worries ignited since S&P’s mass debt rating cuts in Europe. DAX rose 0.04% while CAC 40 gained 0.49%.

Today the ECB will release its monthly report, while the US will be releasing its CPI index, the housing starts and building permits data along with the weekly jobless claims, Philly index and EIA crude oil inventories. In Europe, France will sell 9.5 billion euros of debt while Spain will sell 4.5 billion euros of bonds.

The euro is seeing some gains trading around 1.2888 while the pound is trading with a slight upside momentum around 1.5437. The dollar index is slightly falling trading around 80.36, while the yen is strengthening trading around 76.70. The AUD is weakening following the jobs data trading around 1.0395.

As the US dollar lost its appeal commodities found support for another day where crude is trading with gains around $101.65 compared with the lowest at $101.01 while gold is around $1665.20 from the lowest at $1655.80 as eyes are on Europe.

USD/JPY Forecast January 19, 2012, Technical Analysis

USD/JPY fell for the session on Wednesday as the Dollar got sold off in general. The pair currently is sitting on top of a nice support area at 76.50 level and the market simply hasn’t moved much over the last couple of weeks.

The Bank of Japan is always a threat to intervene, and as a result selling isn’t going to be an option at this level. The market could be bought if we see a break higher as there is an automatic backstop because of the BoJ. The 78.25 level seems to be the top of the range, so we would only get involved in this pair for a short term trade as the market is so tightly wound at this point.

USD/JPY Forecast January 19, 2012, Technical Analysis
USD/JPY Forecast January 19, 2012, Technical Analysis

USD/JPY Fundamental Analysis Jan. 20, 2012, Forecast

Close of the Asian Session

Economic Events: (GMT)

Jan. 19

13:30 USD Core CPI (MoM) 0.10% 0.20%

The Core Consumer Price Index (CPI) measures the changes in the price of goods and services, excluding food and energy. The CPI measures price change from the perspective of the consumer. It is a key way to measure changes in purchasing trends and inflation.

A higher than expected reading should be taken as positive/bullish for the USD, while a lower than expected reading should be taken as negative/bearish for the USD.

13:30 USD CPI (MoM) 0.20% 0.00%

13:30 USD Initial Jobless Claims 385.00K 399.00K

13:30 USD Continuing Jobless Claims 3590.00K 3628.00K

Initial Jobless Claims measures the number of individuals who filed for unemployment insurance for the first time during the past week. This is the earliest U.S. economic data, but the market impact varies from week to week.

Continuing Jobless Claims measures the number of unemployed individuals who qualify for benefits under unemployment insurance.

A higher than expected reading should be taken as negative/bearish for the USD, while a lower than expected reading should be taken as positive/bullish for the USD.  If the report comes in under the 385K we can expect to see the USD fall against the Yen, but if the report is at the 399K level or above expect to see the USD rally and trend upwards on solid economic news.

Analysis and Recommendation:

Levels of Support and Resistance can be found today at:

S:            76.456   76.5555  76.674                 
Pivot:    76.7735
R:            76.892   76.9915   77.11

USD/JPY was trading at 76.76

The USD/JPY closed almost at the open today, moving very little. The duo seem to have been sleeping all week. What little life they have shown has been in reaction of EU.

In the news a comment from a Goldman exec said that the JPY is probably 25% overvalued and Japan’s days of trade and current account surpluses “look to be finished”. Even the Japanese Minister joined the crowd, stating it is difficult at this moment to find an FX level for the JPY similarly to the Swiss Franc. The markets and currencies are all skewed by the EU crisis.

The two will most likely trade in this range for the rest of the week. Watch the US jobs reports, this could be the kickstart the USD needs to rally, but at this writing all looks calm.