USD/JPY Fundamental Forecast – May 3, 2016

The USD/JPY was more or less flat this morning showing little reaction to disappointing Chinese data over the weekend. Traders continue to monitor comments from the Bank of Japan with the yen trading at 106.44 against the US dollar.  The US currency tumbled 4.7 per cent last week to 106.50 yen, the largest drop since October 2008. It lost 2 per cent to $1.1451 per euro. The Bloomberg’s Dollar Spot Index slumped 2 per cent, the most in more than a year, after touching its lowest level since May 2015.

Hedge funds and other large speculators extended bets on dollar weakness after turning net bearish on the currency versus eight peers for the first time since 2014 last week.

Over the weekend, Japan’s Finance Minister Taro Aso expressed concern about the yen’s recent rise, stating that he believed it was due to “speculative” market moves.

Earlier in New York trading, speculation on the yen’s appreciation prevailed, after the Bank of Japan maintained its monetary policy at its recent meeting and the United States added Japan to a new monitoring list over foreign exchange policies, dealers said.

The Strait Times reported that having adopted a negative interest rate on some excess reserves to penalize financial institutions for leaving money idle, the Bank of Japan (BOJ) may consider helping them lend by offering a negative rate on some loans, according to people familiar with talks.

Such a discussion could happen in conjunction with any decision to make a deeper cut to the current negative rate on reserves, said the sources, who asked not to be named.

The BOJ’s Stimulating Bank Lending Facility, which now offers loans at zero per cent interest, would be the most likely vehicle for this option, they said yesterday. The officials said adding this to the central bank’s arsenal could have a positive impact on the economy, but would also raise questions about giving subsidies to commercial lenders.

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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Tuesday, May 3, 2016

Government Bond Auctions

Date Time       Country           Auction

Mar 02 13:00 Norway Details of bond auction on Mar 04

May 04 11:05 Norway Holds bond auction

May 04 11:30 Germany Eur 4bn Apr 2021 Bobl

May 04 11:50 France Holds bond auction

May 04 17:20 Sweden Details of bond auction on May 11

May 05 10:30 Spain Holds bond auction

May 05 11:00 Austria Holds bond auction