The USD/JPY pair retreated last week near its lowest level in three months, where the FX market fluctuated last week due to the instable data about the U.S. economy in addition to the ongoing concerns regarding the EU debt crisis.
The Japanese yen was able to reach to its highest level in eleven years against the euro due to the lower demand on the euro as a result of the current crisis, while the euro advanced in a correction movement which may not be able to continue during the upcoming weeks with renewed downgrade fears.
On the other hand, the greenback fluctuated between gains and losses against most of its major counterparts, depending on the U.S. economic fundamentals which reflected a moderate recovery in the manufacturing sector and drop in the holiday’s season demand.
The current market sentiment is focused on the EU debt crisis developments, and whether the economic fundamentals about major economies came strong or pessimistic, the effect on the financial market is temporary.
Thus, the latest developments regarding the EU debt crisis are forcing us to predict a continuation for the risk aversion scenario in the financial market, which mean more demand for the yen and the dollar against other major currencies, and in contrast more support for the yen against the greenback.
Major highlights for this week that will affect the USD/JPY pair’s trading:
Monday January 16:
On Monday at 23:50 GMT (Sunday), the Japanese economy will issue the Machine Orders for November, where the previous reading was –6.9% and expected to come at 5.1%, while the annual Machine Orders had a prior reading of 1.5% and expected at 3.8%.
Tuesday December 17:
On Tuesday at 23:50 GMT (Monday), Japan will release the Tertiary Industry Index for November, where it’s expected to come at –0.4% compare to the previous reading of 0.6%.
The U.S. Empire Manufacturing for January will be released at 13:30 GMT, where the previous reading was 9.53 and expected to come at 10.50.
Wednesday December 18:
On Wednesday at 04:30 GMT, Japan will issue the Industrial Production for November, where the previous reading was –2.6% while the annual reading had a prior reading of –4.0%.
On the other hand, the Japanese Capacity Utilization for November had a prior reading of 4.1%.
At 13:30 GMT, the U.S. economy will release the Producer Price Index for December, where the prior reading was 0.3% and expected to come at 0.1%, on the other hand the annual Producer Price Index had a prior reading of 5.7% and it’s expected to come at 5.1%.
The Total Net TIC Flows for November will be released at 14:00 GMT, with a previous reading of -$48.8 billion, while the Net Long-term TIC Flows had a previous reading of $4.8 billion.
The U.S. Industrial Production for December will be released at 14:15 GMT, and expected at 0.5% after 0.2% drop. The Capacity Utilization for December had a prior reading of 77.8% with expectations to rise to 78.1%.
Thursday December 19:
On Thursday at 13:30 GMT, the U.S. economy will release the Consumer Price Index for December, where the prior reading was 0.0% and it’s expected to come at 0.1%. The annual CPI had a prior reading of 3.4% and expected to come at 3.1%.
The Housing Starts for December will be released also at 13:30 GMT, where the previous reading was up by 9.3% at 685 thousand, and expected to remain unchanged at 685 thousand. The U.S. Building Permits are expected with 0.7% drop to 675 thousand from the prior reading of 681 thousand.
The weekly initial claims are also due at the same time, where the number of people filing for first-time claims for the state unemployment insurance increased to 399 thousand last week.
Friday December 20:
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 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 issue the Existing Home Sales for December, where the previous was at 4.42 million and expected to rise 3.7% to 4.65 million.