USD/JPY Fundamental Analysis June 1, 2012, Forecast

Analysis and Recommendation:

The USD/JPY fell to 78.75 as investors shifted from the USD to the Yen in safe haven moves. The US had a very disappointing home sales report, which was well under forecast, supporting the theory that the US is hitting a stall.

Markets remain in risk aversion mode and the USD and JPY are extremely strong.

Problems with Spanish banks, Greece politics and Italian Bonds all have investors worried as they continue to shed all European associated assets. The euro fell to a multiyear low, trading at 1.2385.

The euro saw biggest drop in at least eight months as increasing likelihood of Spain needing outside assistance to fix its public finance and banking system led to a major escalation in the perennial crisis in the currency bloc.

Spanish government bond yields surged to a six-month high while German bond yields fell to record lows, pushing the spread between the two to a new high, adding stress to markets already frayed by the anxiety Greece may leave the euro zone.

Italian debt yield also rose above six percent for the first time since May while traders also warily look at whether the Irish will support Europe’s new fiscal treaty as expected in a referendum on Thursday.

With investors trying to escape the euro zone and to hoard liquid assets, the dollar’s index against a basket of currencies rose to 20-month high of 83.11 The dollar fell to as low as 78.71 yen, its lowest in 3 1/2 months, as investors favored the yen, the currency of the world’s largest creditor nation despite a mountain of its public debt.

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 up to the data analysis and information in our weekly reports.

Economic Data for May 30-31, 2012 actual v. forecast

   

CHF

 

 

 

KOF Leading Indicators 

0.81

 

0.48 

 

0.43 

 

 

 

 

USD

 

 

 

Pending Home Sales (MoM) 

-5.5%

 

0.1% 

 

3.8% 

   

May 31

 

KRW

 

 

 

South Korean Industrial Prod

0.0%

 

0.3% 

 

0.3% 

 

 

 

 

JPY

 

 

 

Industrial Production (MoM) 

0.2%

 

0.5% 

 

1.3% 

 

 

 

 

AUD

 

 

 

Building Approvals (MoM) 

-8.7%

 

0.7% 

 

6.0% 

   

 

 

AUD

 

 

 

Private New Capital Expend

6.1%

 

4.0% 

 

-0.7% 

   

 

 

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

Date

Time

Currency

 

Previous

Jun 1

12:30

USD

Non-Farm Employment Change

115K

12:30

USD

Unemployment Rate

8.1%

12:30

USD

Core PCE Price Index m/m

0.2%

12:30

USD

Personal Spending m/m

0.3%

14:00

USD

ISM Manufacturing PMI

54.8

Government Bond Auctions

Date  Time  Country 

May 31  14:30  Sweden 

Jun 04  10:00  Norway 

Jun 05  00:30  Japan  Jun 05  09:30 

Jun 05 14:30  Sweden 

Jun 06  09:30  Germany 

Jun 06  09:30  Portugal 

Jun 06 14:30  UK 

Jun 07  00:30  Japan 

Jun 07  08:30  Spain 

Jun 07  08:50  France 

Jun 07  09:10  Sweden 

Jun 07  15:00  US 

Jun 08  10:00  Belgium 

Jun 08  15:30  Italy 

 

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