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USD/JPY Fundamental Forecast – May 24, 2016

By:
Barry Norman
Published: May 23, 2016, 04:55 UTC

The USD/JPY reacted harshly to the US warning about currency manipulation at the G7 summit. The yen actually gained in the morning session to trade at

USD/JPY Fundamental Forecast – May 24, 2016

The USD/JPY reacted harshly to the US warning about currency manipulation at the G7 summit. The yen actually gained in the morning session to trade at 109.82 even as the US dollar declined. The pair gave up 31 points. Japan released trade balance data with positive numbers at a surplus of ¥430 billion, above the ¥270 billion surplus seen, while imports plunged 23.2% and exports eased 10.1%.

Intraday bias remains bearish till the time pair holds key resistance at 110.58 marks.

Japanese exports declined 10.1% annually in April, much worse than March’s 6.8% year-over-year decline, government data showed on Monday. A median estimate of economists called for exports to fall 10% annually.

Meanwhile, imports declined for a 16th consecutive month, falling 23.3% annually. The decline was much worse than the median estimate, which called for a 19% year-over-year drop. As a result, Japan’s trade surplus rose to 823.5 billion yen in April, up from 755 billion yen the previous month.

If a country’s exports exceed its imports, as in Japan’s recent case, there is in theory a high demand for its goods and therefore for its currency.

“The April trade surplus was due in large part to weak imports. Still, the data was enough to trigger yen buying,” said Masashi Murata, senior currency strategist at Brown Brothers Harriman in Tokyo.

“The trade numbers came out against a political backdrop that does not favor Japan intervening to weaken the yen, thus making it relatively easy for participants to buy back the yen.”

A Group of 7 finance ministers’ meeting concluded on Saturday with the United States warning Japan against intervening to weaken the yen, displaying a well-known rift between the two countries on currency intervention.

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:

Tuesday, May 24, 2016

Cur. Event Actual Forecast Previous
  USD FOMC Member Harker Speaks        
  AUD RBA Governor Stevens Speaks        
  EUR ZEW Economic Sentiment   23.4 21.5  
  EUR Eurogroup Meetings        
  USD New Home Sales (MoM) (Apr)   2.0% -1.5%  
  USD New Home Sales (Apr)   523K 511K

Government Bond Auctions

Date Time       Country           Auction

May 23 N/A UK Syndicated tap of 0.125% I/L 2046 Gilt

May 23 11:03 Sweden Sek 1.25bn 0.125% Jun 2019 I/L bond

May 23 11:30 Germany Eur 1.5bn May 2017 Bubill

May 23 12:00 Norway Details of bond auction on May 25

May 23 17:20 Italy Details of Zero‐coupon/BTP€i auction

May 25 11:03 Sweden Holds bond auction

May 25 11:05 Norway Holds bond auction

May 25 11:30 Germany Eur 1bn 2.5% Jul 2044 Bund

May 26 11:10 Italy Announces details of bond auction

May 26 11:10 Italy Holds Zero‐coupon/BTP€i auction

May 26 17:20 Sweden Details of I/L auction on Jun 02

 

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