USD/JPY Fundamental Forecast – May 2, 2016

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Published: Apr 29, 2016, 03:24 UTC

The USD/JPY dropped to its lowest point in a year to trade at 107.37 falling 74 points as traders pushed the yen after the BoJ surprised and held rates

USD/JPY Fundamental Forecast – May 2, 2016

The USD/JPY dropped to its lowest point in a year to trade at 107.37 falling 74 points as traders pushed the yen after the BoJ surprised and held rates and policy on Thursday. The declining US dollar weighed heavily on the pair. Asian equities sold off and the yen surged against the dollar Thursday after the Bank of Japan’s (BOJ) decision to keep monetary policy steady disappointed a section of the market betting on further stimulus.

Prior to the BOJ decision, government data showed Japan’s core consumer price index, which excludes fresh food prices, dropped 0.3 percent on-year in March. Reuters said economists’ median estimate was for a 0.2 percent annual gain. (CNBC)

The Financial Review stated that in late January, Japan’s central bank stunned markets by adopting negative interest rates in what was seen as a desperate move to stop the economy from sliding back into the deflation that has dogged it for much of the past two decades.

But Kuroda, who several days earlier had appeared to reject the idea of negative interest rates, failed to properly prepare investors for his radical move. Even the BoJ’s policy board appeared surprised, and only approved by a narrow five-to-four vote the decision to impose a charge on banks’ surplus reserves held at the central bank. Meanwhile, global markets were thrown into turmoil. After initially weakening to ¥121 to the US dollar, the yen climbed to around the ¥112-¥114 range.

But the Japanese currency has strengthened even more after Kuroda again wrong-footed investors who had been expecting that the BoJ would take steps to stimulate Japan’s economy. The yen is now trading at around ¥108 against the US dollar, close to its high for the year.

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.

Today’s economic releases:

Cur.	Event	Actual	Forecast	Previous
	Japan – Showa Day
NZD	Building Consents (MoM) (Mar)	-9.8%		10.8%
NZD	ANZ Business Confidence (Apr)	6.2		3.2
AUD	PPI (QoQ) (Q1)	-0.2%	0.2%	0.3%
AUD	Private Sector Credit (MoM) (Mar)	0.4%	0.6%	0.6%
EUR	German Retail Sales (MoM) (Mar)		0.3%	-0.4%
EUR	Core CPI (YoY)		0.9%	1.0%
EUR	GDP (QoQ) (Q1)		0.4%	0.3%
EUR	Unemployment Rate (Mar)		10.3%	10.3%
GBP	BoE MPC Member Cunliffe Speaks
USD	Core PCE Price Index (MoM) (Mar)		0.1%	0.1%
USD	Personal Spending (MoM) (Mar)		0.2%	0.1%
CAD	GDP (MoM) (Feb)		-0.1%	0.6%
CAD	RMPI (MoM) (Mar)		3.7%	-2.6%
USD	Chicago PMI (Apr)		53.0	53.6
USD	Michigan Consumer Sentiment (Apr)		90.0	89.7
USD	Baker Hughes U.S. Rig Count			343

Upcoming Economic Events that you should be monitoring:

Monday, May 2, 2016

Cur.	Event	Actual	Forecast	Previous
	China – Labor Day
	United Kingdom – Early May Bank Holiday
AUD	HIA New Home Sales (MoM) (Mar)			-5.3%
CNY	Caixin Manufacturing PMI (Apr)			49.7
EUR	German Manufacturing PMI (Apr)		51.9	51.9
EUR	Manufacturing PMI (Apr)		51.5	51.5
USD	Manufacturing PMI (Apr)			50.8
USD	ISM Manufacturing Employment			48.1
USD	ISM Manufacturing PMI (Apr)		51.5	51.8