EUR/JPY Fundamental Forecast – February 5, 2016

Analysis and Recommendations:

The EUR/JPY declined 15 points to 130.75 as the yen continued to climb in the risk off environment. Early Thursday, the dollar was down at 118.02 yen having shed 1.7 percent overnight in its biggest daily drop since August.

The fall wiped out all the gains from the Bank of Japan’s decision to cut its rates below zero, a tit-for-tat response that only added to market suspicions central banks were engaged in a war of competitive depreciations.

“If judged necessary, it is possible to cut the interest rate further from the current level of minus 0.1 percent,” the BOJ chief said, noting that the European Central Bank has set its deposit rate at minus 0.3 percent and some other central banks in Europe have adopted higher negative rates.

Kuroda said the new measure was aimed at addressing downside risks stemming from a slowdown in China and emerging markets that could hurt business confidence and affect the inflation trend, which has been improving. Kuroda said the central bank will carry out government bond purchases under its monetary policy “by paying due attention to how a negative interest rate affects the dynamics” of the government bond markets.

As the BOJ now has the means to conduct further monetary easing through the three dimensions of quantity, quality and a negative interest rate, Kuroda said the central bank has “the most powerful monetary policy framework in the history of modern central banking.”

FxEmpire provides in-depth analysis for each asset 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, which covers the current week and are published by Sunday before the new week begins. Daily we share any new events, forecasts or analysis that affect the current day. To achieve a full accurate understanding it is important that you study all of our data and analysis as a whole.

Today’s economic releases:

 

Upcoming Economic Events that you should be monitoring:

Friday, February 5, 2016

Government Bond Auctions

Date Time and Country

Feb 04 11:50 France Holds bond auction

Feb 04 17:20 Sweden Details of I/L bond auction on Feb 11

Feb 08 16:20 Italy Details of bond auction

Feb 09 11:00 Netherlands Holds DSL auction

Feb 09 11:00 Austria Holds bond auction

Feb 09 11:30 Germany Holds I/L bond auction

Feb 09 11:30 UK 0.125% 2026 Gilt linker auction

Feb 09 n/a UK Details of Gilt auction on Feb 17

Feb 09 19:00 US Holds 3-year note auction

Feb 10 11:30 Germany Euro 5bn Mar 2018 Schatz

Feb 10 17:20 Sweden Details of bond auction on Feb 17

Feb 10 19:00 US Holds 10-year note auction

Feb 11 N/A Italy Euro 4-5bn 30-yr syndicated bond auction

Feb 11 11:03 Sweden Holds I/L bond auction

Feb 11 11:10 Italy Announces details of bond auction

Feb 11 11:30 UK 3.5% 2045 Gilt auction

Feb 11 19:00 US Holds 30-year bond auction

Feb 11 n/a US Details of 30-yr TIPS auction on Feb 18

Feb 12 11:10 France Details of bond auction on 18 Feb