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USD/JPY Fundamental Analysis – November 25, 2015 – Forecast

By:
Barry Norman
Published: Nov 24, 2015, 05:02 UTC

Analysis and Recommendation: The USD/JPY kept pace with the declines in the greenback. The pair lost 8 points to trade at 122.77 as the dollar declined 8

USD/JPY Fundamental Analysis – November 25, 2015 – Forecast

usdjpy tuesday bnsnla
Analysis and Recommendation:

The USD/JPY kept pace with the declines in the greenback. The pair lost 8 points to trade at 122.77 as the dollar declined 8 points in the Asian session.  Surveys show that around 90% of primary dealers and economists expect the Fed to raise interest rates in the middle of December. Over the past month, the two-year US note yield has risen by nearly 37 bp to 91 bp.

The implied yield of the December Fed funds futures contract has risen by 4.5 bp to 21.5 bp at the close before the weekend. It is the highest yielding close in more than a month.  It fully discounts a 25 bp rate hike, IF one assumes that the effective Fed funds rate will average 30 bp. To drive home the point that the cycle will be limited and proceed gradually, the Fed may provide sufficient liquidity to keep the Fed funds rate below the midpoint.

The Japanese government will soon announce a basic budget policy that will take a steady step forward on fiscal reconstruction, sources said. The government will basically maintain its plan to curb a rise in general expenditures in the three years from fiscal 2016, which starts in April, to about ¥1.6 trillion, the sources said.

The basic budget policy will state that the government will finance measures for key policy measures of the administration of Prime Minister Shinzo Abe with the fiscal 2016 main budget as well as a supplementary budget for fiscal 2015, the sources said.

TCW Group Inc. says the Bank of Japan has made a mistake and should exit quantitative easing as soon as possible. Invesco Ltd. says the only error was not starting sooner.

The split in views at the funds, which manage a combined $971 billion, comes as BOJ Gov. Haruhiko Kuroda kept monetary policy unchanged Thursday and his board said inflation expectations seem to be rising. TCW is among critics that say easing has only served to artificially inflate asset prices above what is merited by the real economy, and the longer it continues, the bigger the eventual crash. TCW recommends buying sovereign debt as a haven, while Invesco says sell.

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.

Today’s economic releases:

Cur.

 

Event

Actual

Forecast

Previous

 

  EUR

 

German GDP (QoQ) (Q3)

 

0.3%

0.3%

 

 

  EUR

 

German GDP (YoY) (Q3)

 

1.8%

1.8%

 

 

  EUR

 

ECB’s Costa Speaks  

 

 

 

 

 

  EUR

 

German Business Expectations (Nov)

 

104.0

103.8

 

 

  EUR

 

German Current Assessment (Nov)

 

112.4

112.6

 

 

  EUR

 

German Ifo Business Climate Index

 

108.2

108.2

 

 

  AUD

 

RBA Governor Stevens Speaks  

 

 

 

 

 

  USD

 

GDP (QoQ) (Q3)  

 

2.1%

1.5%

 

 

  USD

 

GDP Price Index (QoQ) (Q3)  

 

1.2%

1.2%

 

 

  USD

 

Goods Trade Balance (Oct)

 

-61.80B

-58.63B

 

 

  USD

 

S&P/CS HPI Composite – 20 n.s.a. (YoY)

 

5.1%

5.1%

 

 

  USD

 

CB Consumer Confidence (Nov)

 

99.5

97.6

   

 

usdjpy

Upcoming Economic Events that you should be monitoring:

Tuesday, November 25, 2015

Cur.

 

Event

Actual

Forecast

Previous

 

  USD

 

API Weekly Crude Oil Stock

 

 

-0.482M

 

 

  JPY

 

Monetary Policy Meeting Minutes

 

 

 

 

 

  AUD

 

Construction Work Done (QoQ) (Q3)

 

-2.1%

1.6%

 

 

  GBP

 

BBA Mortgage Approvals

 

45.5K

44.5K

 

 

  AUD

 

RBA Assist Gov. Debelle Speaks 

 

 

 

 

 

  USD

 

Core Durable Goods Orders (MoM)

 

0.3%

-0.3%

 

 

  USD

 

Durable Goods Orders (MoM) (Oct)

 

1.5%

-1.2%

 

 

  USD

 

Initial Jobless Claims

 

270K

271K

 

 

  USD

 

Personal Spending (MoM) (Oct)

 

0.3%

0.1%

 

 

  USD

 

Services PMI (Nov)  

 

55.0

54.8

 

 

  USD

 

Michigan Consumer Sentiment (Nov)

 

93.1

93.1

 

 

  USD

 

New Home Sales (Oct)

 

500K

468K

 

 

  USD

 

Crude Oil Inventories

 

 

0.252M

 

 

  USD

 

Baker Hughes U.S. Rig Count

 

 

564

   

Government Bond Auctions

Date Time Country

Nov 24 17:30 Italy Announces details of BTPs/CCTeu on 27 Nov

Nov 24 11:00 Holland Eur 1.0-2.0bn 0.25% Jul 2025 DSL

Nov 24 19:00 US 13bn 5-year note

Nov 25 11:03 Sweden Sek 4bn 1% Nov 2026 bond

Nov 25 11:10 Italy Auctions CTZ/BTPei

Nov 25 11:30 Germany Eur 3bn 1.0% Aug 2025 Bund

Nov 25 17:30 US Usd 35bn 2-year FRN

Nov 25 19:00 US Usd 29bn 7-year note

Nov 26 11:03 Sweden Sek 5bn 1% Nov 2026 bond exchange

Nov 27 11:03 Sweden 1.5% Nov 2023 bond exchange, 1% Nov 2026 bond exchange

Nov 27 11:10 Italy Auctions BTPs

Nov 27 N/A Spain Announces details of 03 Dec

Nov 30 11:03 Sweden Holds bond auction

Dec 01 11:30 UK 1.5% 2021 Gilt auction

Dec 02 16:30 Sweden Announces details of Bond on 11 Dec

Dec 03 10:30 Spain Auctions

Dec 03 10:50 France Auctions OATs

Dec 03 11:03 Sweden Holds I/L bond auction

Dec 04 11:03 Sweden Holds I/L bond auction

 

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