USD/JPY Fundamental Forecast – July 26, 2016

The USD/JPY added 33 points after the release of better than expected Japanese trade data. The yen trading at 106.46. Japan posted a goods trade surplus for a half-year period in January to June for the first time since a massive earthquake and tsunami hit the country in March 2011, due mainly to a plunge in the value of imports on the back of declining crude oil prices, the government said Monday.

During the first half of 2016, the trade surplus came to 1.81 trillion yen ($17 billion), turning around from a deficit of 1.70 trillion yen a year earlier, the Finance Ministry said in a preliminary report.

In the January-June period, the value of exports decreased 8.7 percent from a year earlier to 34.52 trillion yen, weighed down by sharp falls in the value of steel and semiconductor shipments amid a slowdown in Chinese and other emerging economies.

Imports plunged 17.2 percent to 32.70 trillion yen, led by sharp declines in crude oil and liquefied natural gas imports.

The yen has risen around 13 percent versus the dollar so far this year, and some Japanese policymakers are worried about further gains that would severely erode exporters’ earnings and increase deflationary pressure by lowering import prices.

The government is crafting a massive spending package worth about 20 trillion yen (FX), three government sources told Reuters last week.

The BOJ is expected to ease monetary policy at a meeting ending on July 29, a Reuters poll of economists found, to boost anemic inflation.

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Tuesday, July 26, 2016

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Jul 25 11:30 Germany Eur 1.5bn Jul 2017 Bubill

Jul 25 17:20 Italy Announces details of bond auction

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Jul 27 11:30 Germany Eur 1bn 2.5% Aug 2046 Bund

Jul 28 11:10 Italy Holds bond auction