USD/JPY Fundamental Forecast – August 29, 2016

The USD/JPY showed little reaction to disappointing inflation data released this morning. The JPY is trading at 100.47 dead center of its current trading range. Japanese Yen depreciated by 0.08 percent yesterday as markets remain quiet ahead of the Jackson Hole conference today.

Moreover, weak release of GDP and inflation data from the nation further added to the woes. Tokyo Core CPI for the July reading stands at -0.3 percent which means that the nation is still struck by deflation and it is clear that the government’s Abenomics economic plan and BoJ easing has not worked for the economy. CPI data reported this morning was below expectations and forced markets to assume further stimulus from the Bank of Japan to prop up inflation. Major moves can be expected after Yellen speech but the pair is likely to settle near the 100.00 mark.

Japan’s economic growth plunged for the quarter ending Jun’16 on weak exports and capital expenditure, putting even more pressure on PM Shinzo Abe to come up with policies that produce more sustainable growth.

The yen likely to trade slightly positive as investors flock towards safe-haven assets so as to play safe prior to the Jackson Hole meeting.

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August 29, 2016

Government Bond Auctions

Date Time Country Auction

Aug 25 18:00 US Holds 7yr note auction

Aug 26 10:10 Italy Holds zero coupon