EUR/JPY Weekly Fundamental Analysis September 24-28, 2012 Forecast

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Introduction: This is one of the most popular crosses. The primary reason why EUR/JPY has rallied 11 percent over the past 3.5 months is because of US growth – not many people realize that the price action of EUR/JPY is directly correlated with how the US economy is doing.

Weekly Analysis and Recommendations:

The EUR/JPY closed the week at 101.45 down for the week as the euro lost some of its momentum as the ECB and FOMC faded into the past. The euro rose against the yen on Friday, buoyed by reports that Spain may be close to requesting financial assistance from multilateral financial bodies. The yen, meanwhile, moved lower in wake of a Bank of Japan move to stimulate its economy, though the pair regained composure in afternoon U.S. trading.

Date

Last

Open

High

Low

Change %

Sep 21, 2012

101.45

101.47

102.10

101.26

-0.02%

Sep 20, 2012

101.47

102.37

102.40

100.94

-0.87%

Sep 19, 2012

102.36

102.76

103.63

102.12

-0.39%

Sep 18, 2012

102.76

103.13

103.22

102.41

-0.36%

Sep 17, 2012

103.13

102.74

103.86

102.58

0.38%

The Financial Times reported earlier that Spain is moving closer to requesting a sovereign bailout and is currently working out the details with European Union policymakers. A bailout would allow the European Central Bank to step in and buy Spanish sovereign debt, which would lower borrowing costs in the large European economy.

Asian markets will put Japan’s troubled economy into the spotlight and may therefore result in thank you cards coming from Europe.  Each of jobs, household spending, retail sales, CPI, industrial production and housing starts will be updated for the Japanese economy.  The fact that the country’s economy is troubled is an understatement.  Retail sales have been falling, deflation has reared its ugly face again and is expected to persist into the September readings, and factory output has been in a free-fall over recent months. 

One is economic weakness in China and turbulent political relations with that country.  The other is an elevated yen that shook off an additional ¥10 trillion in monetary easing by the Bank of Japan to push higher yet.  A driving force behind the yen is that domestic deflationary pressures have widened the real rate gap compared to other countries that are experiencing soft inflation.  Yen strength is seriously eroding the competitiveness of Japan’s domestic production and exports. 

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 for the week of September 17-21, 2012 actual v. forecast for Yen, the Aussie, the Kiwi and USD

Date

Currency

Event

Actual

Forecast

Previous

Sep. 17

USD

NY Empire State Manufacturing Index 

-10.4

-2.0

-5.8

Sep. 18

USD

Current Account 

-117.4B

-125.5B

-133.6B

 

USD

TIC Net Long-Term Transactions 

67.0B

45.3B

9.3B

 

NZD

Current Account 

-1.80B

-1.64B

-1.07B

Sep. 19

JPY

Interest Rate Decision 

0.10%

0.10%

0.10%

 

USD

Building Permits 

0.803M

0.796M

0.811M

 

USD

Housing Starts 

0.750M

0.765M

0.733M

 

USD

Existing Home Sales 

4.82M

4.55M

4.47M

 

NZD

GDP (QoQ) 

0.6%

0.3%

1.0%

Sep. 20

JPY

Trade Balance 

-0.47T

-0.37T

-0.37T

 

USD

Initial Jobless Claims 

382K

375K

385K

 

USD

Continuing Jobless Claims 

3272K

3300K

3304K

 

USD

Philadelphia Fed Manufacturing Index 

-1.9

-4.0

-7.1

 

Economic Highlights of the coming week that affect the AUD, JPY, NZD and USD

Date

Time

Currency

Event

Forecast

Previous

Sep. 25 

15:00

USD

CB Consumer Confidence 

62.0 

60.6 

 

23:45

NZD

Trade Balance 

-606M 

15M 

Sep. 27

23:45

NZD

Building Consents (MoM) 

 

2.0% 

Sep. 28 

00:30

JPY

Unemployment Rate 

4.3% 

4.3% 

 

00:30

JPY

Tokyo Core CPI (YoY) 

-0.3% 

-0.5% 

 

00:50

JPY

Industrial Production (MoM) 

-0.5% 

-1.0% 

 

00:50

JPY

Retail Sales (YoY) 

-0.2% 

-0.8% 

Government Bond Auction

Date Time Country 

Sep 24 09:10 Norway 

Sep 24 09:30 Germany 

Sep 24 10:00 Belgium 

Sep 24 15:30 Italy  

Sep 25 08:30 Holland 

Sep 25 08:30 Spain 

Sep 25 09:10 Italy  

Sep 25 14:30 UK 

Sep 25 17:00 US 

Sep 26 09:10 Italy  

Sep 26 09:10 Sweden 

Sep 26 09:00 Germany 

 

 

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About: FX Empire Analyst - Barry Norman

Barry produces a private Daily Market Review newsletter that is distributed around the globe to over 25,000 subscribers and recently published a book on Options Trading that is available from amazon.com

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