USD/JPY Fundamental Analysis – Forecast for the week of September 19, 2016

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Published: Sep 17, 2016, 06:58 UTC

The USD/JPY closed the week at 102.28 dead center of its trading range as traders are focused on the Bank of Japan meeting as bank members leave markets

USD/JPY Fundamental Analysis – Forecast for the week of September 19, 2016

The USD/JPY closed the week at 102.28 dead center of its trading range as traders are focused on the Bank of Japan meeting as bank members leave markets completely uncertain. The pair is a strong sell this week with the two banks expected to do the exact opposites. The yen was down 0.4% on the week and the pair is down 15% on a year to date basis.

The Japanese yen is up 0.2%, outperforming the G10 in an environment of broad-based USD strength, its gains driven by the broader tone of risk aversion with additional upside risk into the NA open. JPY’s risk profile leaves it vulnerable to knee-jerk rallies in periods of risk aversion, strengthening on the back of safe-haven flows. Measures of sentiment are mixed across time horizons as shorter-term measures reflect concerns surrounding the BoJ atypically pricing a slight premium for protection against JPY weakness as longer-term measures suggest a rise in demand for protection against JPY strength. Markets continue to highlight the risk of a disappointment and note the broadening narrative of discord among policymakers at the BoJ. JPY’s vulnerability thus lies to the upside as we consider the growing risk of a BoJ disappointment, with added support from the broader tone of risk aversion.

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This Week’s Economic Events That You Should Be Monitoring:

Date	Country	Name	Volatility	Previous
9/20/2016	AUD	RBA Meeting’s Minutes	3
9/20/2016	CAD	BoC Governor Poloz	3
9/21/2016	AUD	Mid-Year Economic Outlook	3
9/21/2016	JPY	BoJ Interest Rate Decision	3	-0.1
9/21/2016	JPY	BoJ Monetary Policy Statement	3
9/21/2016	JPY	BoJ Press Conference	3
9/21/2016	USD	FOMC Economic Projections	3
9/21/2016	USD	Fed’s Monetary Policy Statement	3
9/21/2016	USD	Fed Interest Rate Decision	3	0.5
9/21/2016	USD	FOMC Press conference	3
9/21/2016	NZD	RBNZ Interest Rate Decision	3	2
9/22/2016	EUR	ECB President Draghi’s Speech	3
9/23/2016	AUD	RBA’s Governor Lowe Speech	3