USD/JPY Fundamental Analysis – for the week of August 9, 2016

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Published: Aug 6, 2016, 05:59 UTC

The USD/JPY is a strong sell this coming week closing at 101.79 with a loss of 0.26% for the week and the yen is up almost 18% for the year. The fiscal

USD/JPY Fundamental Analysis – for the week of August 9, 2016

The USD/JPY is a strong sell this coming week closing at 101.79 with a loss of 0.26% for the week and the yen is up almost 18% for the year. The fiscal programs announced by the government had an opposite effect on the markets sending the yen on a rally. Japan’s cabinet approved a 28 trillion-yen ($280 billion at the August 4 exchange rate) stimulus package, which included cash payments to those with lower income, adding more workers to pension programs, college scholarships and fresh infrastructure projects.

The Bank of Japan (BoJ) eased monetary conditions only slightly following the July 28-29th policy meeting. The central bank will continue to execute its prior policy of increasing Japan’s monetary base by ¥80 trillion annually via large-scale asset purchases. The guidelines for government bond and real estate investment trust purchases were left unchanged, yet exchange-traded funds will be bought in larger quantities (¥6 trillion vs. ¥3.3 trillion). Authorities will continue to apply a negative interest rate of -0.1% to financial institutions’ excess current account balances at the central bank. The policymakers also announced measures to guarantee smooth foreign currency funding by Japanese firms and doubled the size of the BoJ’s US dollar lending program to US$24 billion. The BoJ acknowledged that there is “considerable uncertainty” regarding Japan’s inflation outlook given current global economic and financial market conditions. The central bank announced that it will conduct a comprehensive assessment of Japan’s economic and price outlook under the existing monetary policy framework and study the effects of quantitative easing and negative interest rates.

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

Date	Country	Name	Volatility	Previous	Consensus
8/9/2016	GBP	NIESR GDP Estimate (3M)	3	0.6
8/10/2016	AUD	RBA’s Governor Stevens	3
8/10/2016	NZD	RBNZ Interest Rate Decision	3	2.25	2
8/10/2016	NZD	Monetary Policy Statement	3
8/10/2016	NZD	RBNZ Press Conference	3
8/12/2016	EUR	Gross Domestic Product M	3	0.3	0.3
8/12/2016	EUR	Gross Domestic Product Y	3	1.6	1.6
8/12/2016	USD	Retail Sales (MoM)	3	0.6	0.4