USD/JPY Fundamental Analysis August 20, 2012, Forecast

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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% 

 

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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