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USD/JPY Fundamental Forecast – June 27, 2016

By:
Barry Norman
Published: Jun 24, 2016, 02:58 UTC

The USD/JPY dipped 256 points to trade at 103.61 as both the yen and the dollar were favored in risk off trading as the UK seems to be favoring leaving

USD/JPY Fundamental Forecast – June 27, 2016

The USD/JPY dipped 256 points to trade at 103.61 as both the yen and the dollar were favored in risk off trading as the UK seems to be favoring leaving the Eurozone. The dollar soared to 95.04. “Stocks and sterling are whipsawing around as markets are starting to price in a Brexit. The pound is swinging around and FTSE futures are trading down 5% at present. Gold is rallying strongly on safe haven demand,” said Joe Rundle, head of trading at ETX Capital in a note.

“We can expect to see these gyrations continue throughout the night as traders react to the referendum results as they come in. We’re not seeing a panic just yet but the complacency has definitely gone,” he added.

Financial markets appear to have latched on to the bookmakers rather than polls, and the pound strengthened ahead of voting in the UK.

Mark Johnson, senior foreign exchange and derivatives dealer at OMF, said if the “remain” camp wins and the New Zealand dollar rallies, the gains could be amplified by traders who had bet on a Brexit and a weaker Kiwi being forced to buy back their positions.

If the Brexit campaign wins, “there’s going to be a risk-off tone” in financial markets, he said.

An elevated kiwi may encourage the Reserve Bank to cut interest rates because of the damping effect on imported inflation well below its target band.

The yen rallied against the dollar while the euro turned negative on Friday after Newcastle, seen as a safe “remain” district, reported only a marginal win for Britain to stay in the European Union.

FxEmpire provides in-depth analysis for each asset 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, which covers the current week and are published by Sunday before the new week begins. Daily we share any new events, forecasts or analysis that affect the current day. To achieve a full accurate understanding it is important that you study all of our data and analysis as a whole.

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Upcoming Economic Events that you should be monitoring:

Monday, June 27, 2016

Country Name Volatility Previous
Spain Parliamentary Election 2
NZ Trade Balance (MoM) 2 292
NZ Imports 2 4.01
NZ Trade Balance (YoY) 2 -3.66
NZ Exports 2 4.3
U.S. Markit Services PMI 2 51.3
U.S. Markit PMI Composite 2 50.9
U.S. Dallas Fed Manufacturing 2 -20.8
U.S. Gross Domestic Product Price Index 2 0.6
U.S. Gross Domestic Product Annualized 2 0.8
U.S. Personal Consumption Expenditures Prices 2 0.3
U.S. Core Personal Consumption Expenditures 2 2.1
U.S. S&P/Case-Shiller Home Price Indices 2 5.4
U.S. Consumer Confidence 2 92.6

Government Bond Auctions

Date Time       Country           Auction

Jun 22 11:03 Sweden Sek 3.5bn 4.25% Mar 2019 bond

Jun 22 11:30 Germany Eur 1bn 2.5% Aug 2046 Bund

Jun 22 17:20 Italy Details of Zero-coupon/BTPei auction

Jun 22 17:30 US USD 13bn 2Yr FRN, USD 5bn 30Yr TIPS

Jun 22 19:00 US USD 28bn 7Yr Notes

Jun 27 11:10 Italy Holds zero-coupon/BTPei auction

Jun 27 11:30 Germany Eur 1.5bn Jun 2017 Bubill

Jun 27 17:20 Italy Details of bond auction

Jun 28 N/A UK BoE Brexit referendum market liquidity operation

Jun 30 11:10 Italy Holds bond auction

Jun 21 N/A UK BoE Brexit referendum market liquidity operation

Jun 22 11:03 Sweden Sek 3.5bn 4.25% Mar 2019 bond

Jun 22 11:30 Germany Eur 1bn 2.5% Aug 2046 Bund

Jun 22 17:20 Italy Details of Zero-coupon/BTPei auction

 

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