EUR/JPY Fundamental Analysis – week of July 25, 2016 -Forecast

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Published: Jul 23, 2016, 06:37 UTC

The EUR/JPY closed out the week with a gain of 0.69% as the yen and the euro dipped. The yen is falling ahead of the BoJ meeting this week as traders

EUR/JPY Fundamental Analysis – week of July 25, 2016 -Forecast

The EUR/JPY closed out the week with a gain of 0.69% as the yen and the euro dipped. The yen is falling ahead of the BoJ meeting this week as traders prepare for helicopter money. The pair is trading at 116.50 down over 10% year to date. BOJ Governor Kuroda mentioned that the central bank isn’t considering adding monetary stimulus just yet, dousing hopes for larger bond purchases in their upcoming monetary policy statement next week. This led the yen to regain ground after speculations of additional QE surfaced on PM Abe’s order to prepare a government economic stimulus program the other week.

Japan’s flash manufacturing PMI beat expectations with a rise from 48.1 to 49.0, outpacing the consensus at 48.3 and indicating a slower pace of industry contraction.

The Japanese macro calendar starts on Monday when the merchandise trade balance for June will be released and should return to positive territory. Moreover, the index of business conditions for May will be published, with no estimate available, but the April number was at 100.

The Bank of Japan (BoJ) will announce its monetary policy decision. The official market consensus expects no changes, with the annual rise in the monetary base most likely staying at ¥80 trillion, whilst the interest rate is expected to remain at -0.1%.

The yen has depreciated sharply in the last two weeks and lost around 6 big figures mainly due to speculation that the BoJ will deliver further monetary stimulus, but these rumors were negated on Thursday by BoJ Governor Haruhiko Kuroda, but still, the Bank might surprise at its Thursday meeting.

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Major Economic Events for the week:

Date	Currency	Name	Volatility	Previous	Consensus
7/27/2016	AUD	Consumer Price Index (YoY)	3	1.3	1.1
7/27/2016	USD	Durable Goods Orders	3	-2.2	-1.1
7/27/2016	USD	Fed’s Monetary Policy Statement	3
7/27/2016	USD	Fed Interest Rate Decision	3	0.5
7/28/2016	JPY	BoJ Press Conference	3
7/29/2016	JPY	BoJ Interest Rate Decision	3	-0.1	-0.2
7/29/2016	JPY	BoJ Monetary Policy Statement	3
7/29/2016	EUR	Gross Domestic Product (YoY)	3	1.7	1.6
7/29/2016	EUR	Gross Domestic Product (QoQ)	3	0.6	0.3
7/29/2016	EUR	Consumer Price Index (YoY)	3	0.1
7/29/2016	EUR	Consumer Price Index – Core	3	0.9