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EUR/JPY Fundamental Forecast – July 27, 2016

By:
Barry Norman
Published: Jul 26, 2016, 03:32 UTC

The EUR/JPY tumbled 1.15 points to trade at 115.19 as the euro eased and the Japanese yen prepared for the Bank of Japan meeting as well as a barrage of

EUR/JPY Fundamental Forecast – July 27, 2016

The EUR/JPY tumbled 1.15 points to trade at 115.19 as the euro eased and the Japanese yen prepared for the Bank of Japan meeting as well as a barrage of economic data due this week. “There’s no aggressive buying ahead of the events this week. It seems profit-taking was kicking in, as Tokyo stocks weakened,” said Yuzu Sakai, manager of FX business promotion at Tokyo Forex & Ueda Harlow.

“We would see similar moves again tomorrow,” Sakai said. “But many investors seem to have been hesitant to sell (the safety of) the yen,” given recent uncertainties such as the mass shooting in Germany last week, said Sakai.

Investors shrugged off the Group of 20 finance ministers and central bankers meeting over the weekend which redoubled their commitments to use all available policy tools to boost economic growth.

The dollar weakened against the yen on Monday ahead of the U.S. Federal Reserve’s meeting on Tuesday and Wednesday, and a Bank of Japan meeting on Friday.

The dollar had gained against major currencies in recent weeks as better-than-expected economic data revived expectations that the Fed would raise interest rates again this year.

Japanese and European central banks, by contrast, are seen as adopting more simulative policies to stave off deflation and generate growth. The Bank of Japan may, however, underwhelm investors this week as it faces dwindling options to reboot the country’s economy, analysts said.

“The risk is that the market’s disappointed in one fashion or another with the BOJ,” said Marc Chandler, global head of currency strategy at Brown Brothers Harriman in New York. “Expectations are strong enough that if they don’t do anything, the yen’s going to strengthen.”

The greenback weakened 0.24 percent to 105.81 yen on Monday. The yen briefly erased gains after Nikkei reported that Japan would double net fiscal spending to 6 trillion yen.

Bank of Japan Governor Haruhiko Kuroda said on Saturday he would ease policy further, if necessary, to achieve its 2 percent inflation goal. Kuroda also shrugged off speculation that the BoJ would directly underwrite government debt, which is prohibited by law.

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Upcoming Economic Events that you should be monitoring:

Wednesday, July 27, 2016

Country Name Volatility Previous
AUD Consumer Price Index (QoQ) 3 -0.2
AUD RBA trimmed mean CPI (YoY) 3 1.7
AUD Consumer Price Index (YoY) 3 1.3
AUD RBA trimmed mean CPI (QoQ) 3 0.2
EUR Gfk Consumer Confidence Survey 2 10.1
GBP Gross Domestic Product (YoY) 2 2
GBP Gross Domestic Product (QoQ) 2 0.4
USD Durable Goods Orders 3 -2.2
USD Durable Goods Orders Core 3 -0.3
USD Pending Home Sales (YoY) 2 2.4
USD Pending Home Sales (MoM) 2 -3.7
USD Fed’s Monetary Policy Statement 3
USD Fed Interest Rate Decision 3 0.5

Government Bond Auctions

Date/Time Country Type

Jul 25 11:30 Germany Eur 1.5bn Jul 2017 Bubill

Jul 25 17:20 Italy Announces details of bond auction

Jul 26 11:10 Italy Holds zero-coupon/BTP€i auction

Jul 27 11:30 Germany Eur 1bn 2.5% Aug 2046 Bund

Jul 28 11:10 Italy Holds bond auction

 

 

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