USD/JPY Fundamental Analysis August 20, 2012, Forecast

Posted August 17, 2012 5:17 (GMT) | By FX Empire Analyst - Barry Norman | Print | Font Size
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Analysis and Recommendation:

The USD/JPY is trading at 79.37 as the week closes in Asia for the weekend. The USD was strong earlier in the day, but declined after lackluster eco data from housing starts, jobs and manufacturing were released. Data showed some signs of life in the economy but were still below forecast but better the previous releases.

Japan’s government approved on Friday budget guidelines for the next fiscal year from April 2013 with a focus on promotion of its growth strategy as Tokyo aims to strike a balance between efforts to prop up the economy and rein in snowballing debt.

The government pledged to keep general spending excluding debt servicing at this year’s level of around 71 trillion yen ($895.73 billion). New borrowing will also remain capped at 44 trillion yen, in line with Japan’s medium-term fiscal plan.

But the spending and borrowing caps will not prevent Japan’s debt — already worth twice its annual economic output — from growing, with the OECD estimating next year’s budget deficit at 9 percent of GDP.

Last week, Prime Minister Yoshihiko Noda’s government pushed through a controversial plan to double the sales tax to 10 percent by 2015 and is keen to convince voters that the economy will have enough momentum to withstand the tax hike’s impact. Ministries are expected to seek up to 4 trillion yen to fund growth policies, while they are required to cut public works and other discretionary spending by 10 percent or 1 trillion yen, a finance ministry official said.

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 up to the data analysis and information in our weekly reports.

Economic Data August 16-17, 2012 actual v. forecast (No Asian releases on the 17th)

Date

Currency

Event

Actual

Forecast

Previous

Aug. 16

KRW

South Korean Unemployment Rate

3.1%

3.3%

3.2%

GBP

Retail Sales (MoM)

0.3%

-0.1%

0.8%

GBP

Retail Sales (YoY)

2.8%

1.4%

2.6%

EUR

CPI (YoY)

2.4%

2.4%

EUR

Core CPI (YoY)

1.7%

1.9%

1.6%

USD

Building Permits

0.812M

0.770M

0.760M

CAD

Foreign Securities Purchases

-7.89B

10.67B

26.11B

USD

Housing Starts

0.746M

0.757M

0.754M

CAD

Manufacturing Sales (MoM)

-0.40%

0.40%

-0.40%

USD

Initial Jobless Claims

366K

365K

364K

USD

Continuing Jobless Claims

3305K

3300K

3336K

USD

Philadelphia Fed Manufacturing Index

-7.1

-5.0

-12.9

Upcoming Economic Events that affect the AUD, NZD, JPY and USD

Date	Time	Currency	Event	Previous
Aug 21	1:30	AUD	Monetary Policy Meeting Minutes
	3:00	NZD	Inflation Expectations q/q	2.4%
	23:50	JPY	Trade Balance	-0.30T
Aug 22	0:30	AUD	MI Leading Index m/m	0.8%

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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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