EUR/JPY Monthly Fundamental Forecast – December 2015

The EUR/JPY tumbled this month as the euro reached its lowest level in years ahead of ECB stimulus due in December. At the same time, the Bank of Japan held off on additional stimulus plans giving the JPY a bit of strength. The Japanese economy fell back into a recession this month leaving traders unsure about Abenomics. The pair closed at 130.18 down 10% for the month. The central bank may refrain from added stimulus because it’s becoming more optimistic on prospects for the Japanese economy, Morgan Stanley said. The bank previously projected the yen would weaken to 125 per dollar by the end of next year.

“Markets overestimate the BOJ’s future easing intentions,” analysts including Hans Redeker, Morgan Stanley’s head of global foreign-exchange strategy, wrote in a report. “The BOJ has moved from a progressive towards a reluctant easing stance, which is not yet priced into foreign-exchange markets.”

Government data showed capital spending jumped 11.2 percent in the third quarter from a year earlier, more than economist forecasts for 2.2 percent growth. The gain raises the possibility of an upward revision to gross domestic product after news last month that Japan had slipped into a recession. Company profits increased 9 percent after jumping almost 24 percent in the previous three months.

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.

Major Economic Events That Will Affect The Markets In December