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EUR/JPY Fundamental Forecast – June 2016

By:
Barry Norman
Published: Jun 1, 2016, 09:46 UTC

The EUR/JPY is trading at 123.31 seeing a gain of 1.08% this month but the pair is down almost 6% year to date. The euro is trading near its lowest level

EUR/JPY Fundamental Forecast – June 2016

The EUR/JPY is trading at 123.31 seeing a gain of 1.08% this month but the pair is down almost 6% year to date. The euro is trading near its lowest level at the end of the month while gaining some momentum mid-month.  As Prime Minister Abe is set to cancel or delay the sales tax increase the yen is beginning to rebound but overall economic data has remained weak. The Bank of Japan) will likely add monetary stimulus to the struggling economy over the coming months as the country’s battle against deflation continues. Despite ongoing economic challenges, the central bank opted to keep its monetary policy stance unchanged following the April 28th meeting, continuing its policy of “Quantitative and Qualitative Monetary Easing with a Negative Interest Rate”. National headline inflation dipped back into negative territory in March as prices declined by 0.1% y/y, compared with a +0.3% reading a month before.

Japan’s real GDP growth outlook remains muted, with output growth averaging 0.5% y/y in 2016-17 on the back of subdued export sector performance and weak domestic demand; soft wage growth and consumers’ deflationary mindset will discourage spending by households.

The euro remains near the bottom of its trading range despite the array of internal headwinds and turmoil in global markets, the Eurozone economy registered a strong start to the year. Real GDP advanced by a solid 0.6% q/q in the first quarter of 2016, beating consensus expectations of 0.4%. This represents the best outturn in a year, twice the rate of growth recorded in the prior quarter and the final boost needed to lift the Eurozone economy above its pre-crisis peak in 2008. Consumer spending will likely prove to be the main impetus driving the acceleration thanks to ongoing improvements in labour market conditions. Indeed, Eurozone unemployment continues to edge lower.

Traders are not expecting any change from the ECB this week but Mario Draghi is expected to give some insight into inflation worries in the Eurozone.

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 recent analysis and information in our  weekly reports and we provide daily updates and outlooks.

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Upcoming Economic Events that you should be monitoring:

Time Cur. Imp. Event Actual Forecast Previous
Wednesday, June 1, 2016
    CNY Manufacturing PMI (May)   50.0 50.1
    AUD GDP (QoQ) (Q1)   0.8% 0.6%
    CNY Caixin Manufacturing PMI (May)   49.3 49.4
    GBP Manufacturing PMI (May)   49.6 49.2
    USD ISM Manufacturing PMI (May)   50.4 50.8
Thursday, June 2, 2016
    AUD Retail Sales (MoM) (Apr)   0.3% 0.4%
    GBP Construction PMI (May)   52.0 52.0
    EUR Interest Rate Decision (Jun)   0.00% 0.00%
    USD ADP Nonfarm Employment Change (May)   175K 156K
    EUR ECB President Draghi Speaks      
Friday, June 3, 2016
    GBP Services PMI (May)   52.5 52.3
    USD Nonfarm Payrolls (May)   162K 160K
    USD Unemployment Rate (May)   4.9% 5.0%
    USD ISM Non-Manufacturing PMI (May)   55.5 55.7
Monday, June 6, 2016
    Holiday New Zealand – Queen’s Birthday
    USD Fed Chair Yellen Speaks      
Tuesday, June 7, 2016
    AUD Interest Rate Decision (Jun)     1.75%
    CAD Ivey PMI (May)     53.1
    JPY GDP (QoQ) (Q1)     0.4%
Wednesday, June 8, 2016
    CNY Trade Balance (USD) (May)     45.56B
    GBP Manufacturing Production (MoM) (Apr)     0.1%
    NZD Interest Rate Decision   2.25% 2.25%
Thursday, June 9, 2016
    Holiday China – Dragon Boat Festival
    CNY CPI (YoY) (May)     2.3%
Friday, June 10, 2016
All Day   Holiday China – Dragon Boat Festival
  CAD Employment Change (May)     -2.1K
Sunday, June 12, 2016
  CNY Industrial Production (YoY) (May)     6.0%
Monday, June 13, 2016
  Holiday Australia – Queen’s Birthday
Tuesday, June 14, 2016
    GBP CPI (YoY) (May)     0.3%
    USD Core Retail Sales (MoM) (May)     0.8%
    USD Retail Sales (MoM) (May)     1.3%
Wednesday, June 15, 2016
    GBP Claimant Count Change (May)     -2.4K
    USD Fed Chair Yellen Speaks      
    USD Fed Interest Rate Decision   0.50% 0.50%
    NZD GDP (QoQ) (Q1)     0.9%
Thursday, June 16, 2016
    AUD Employment Change (May)     10.8K
    GBP Retail Sales (MoM) (May)     1.3%
    EUR CPI (YoY) (May)     -0.1%
    GBP Interest Rate Decision (Jun)     0.50%
Friday, June 17, 2016
  CAD Core CPI (MoM) (May)     0.2%

 

 

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