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USD/JPY Fundamental Forecast – May 5, 2016
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Short-covering and profit-taking continued to drive the USD/JPY higher. A potentially bullish technical chart pattern also helped encourage further
Short-covering and profit-taking continued to drive the USD/JPY higher. A potentially bullish technical chart pattern also helped encourage further position-squaring. The strong follow-through rally drove the Forex pair as high as 107.426 before settling at 107.119, up 0.522 or +0.49%.
The U.S. Dollar reversed to the upside against the Japanese Yen after the Forex pair reached its lowest level since October 2014, when the Bank of Japan launched its second massive round of quantitative easing. Some traders blame the lack of liquidity due to a bank holiday in Japan for the profit-taking and short-covering rally.
On Wednesday, investors will get the opportunity to react to the latest U.S. economic data including the ADP employment report for April. This report could give traders an indication of what to expect in Friday’s U.S. Non-Farm Payrolls report. Investors expect the report to show the economy added 196,000 private sector jobs in April. The range is 205K to 196K.
There will also be data on factory orders, productivity and the ISM services index. Economists forecast the trade deficit narrowed in March due to a decline in imports and the ISM non-manufacturing index rose in April.
A better-than-expected ADP report could increase the chances of a June rate hike which should help support the U.S. Dollar today. The Japanese Yen could strengthen if the number misses to the downside.
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 | |||
| USD | API Weekly Crude Oil Stock | 1.265M | 0.500M | -1.070M | |||
| USD | API Weekly Cushing Crude Oil Stock | 0.382M | 1.900M | ||||
| NZD | Employment Change (QoQ) (Q1) | 1.2% | 0.7% | 0.9% | |||
| NZD | Unemployment Rate (Q1) | 5.7% | 5.5% | 5.3% | |||
| USD | FOMC Member Lockhart Speaks | ||||||
| JPY | Japan – Greenery Day | ||||||
| EUR | German Services PMI (Apr) | 54.5 | 54.6 | 54.6 | |||
| EUR | Markit Composite PMI (Apr) | 53.0 | 53.0 | 53.0 | |||
| EUR | Services PMI (Apr) | 53.1 | 53.2 | 53.2 | |||
| GBP | Construction PMI (Apr) | 52.0 | 54.0 | 54.2 | |||
| EUR | Retail Sales (MoM) (Mar) | -0.5% | -0.1% | 0.3% | |||
| EUR | German Buba President Weidmann Speaks | ||||||
| USD | ADP Nonfarm Employment Change (Apr) | 196K | 200K | ||||
| USD | Nonfarm Productivity (QoQ) (Q1) | -1.4% | -2.2% | ||||
| USD | Trade Balance (Mar) | -41.50B | -47.10B | ||||
| USD | Unit Labor Costs (QoQ) (Q1) | 3.3% | 3.3% | ||||
| CAD | Trade Balance (Mar) | -1.40B | -1.91B | ||||
| USD | Markit Composite PMI (Apr) | 51.7 | |||||
| USD | Services PMI (Apr) | 52.1 | 52.1 | ||||
| USD | Factory Orders (MoM) (Mar) | 0.6% | -1.7% | ||||
| USD | ISM Non-Manufacturing Employment (Apr) | 50.3 | |||||
| USD | ISM Non-Manufacturing PMI (Apr) | 54.7 | 54.5 | ||||
| USD | Crude Oil Inventories | 1.695M | 1.999M | ||||
| USD | Cushing Crude Oil Inventories | 1.746M | |||||
| USD | FOMC Member Kashkari Speaks | ||||||
| AUD | HIA New Home Sales (MoM) (Mar) | -5.3% | |||||
| AUD | Retail Sales (MoM) (Mar) | 0.3% | 0.0% | ||||
| AUD | Trade Balance (Mar) | -2.900B | -3.410B | ||||
| CNY | Caixin Services PMI (Apr) | 52.6 | 52.2 | ||||
Upcoming Economic Events that you should be monitoring:
Thursday, May 5, 2016
| Cur. | Event | Actual | Forecast | Previous |
| JPY | Japan – Children’s Day | |||
| GBP | Halifax House Price Index (MoM) | 0.1% | 2.6% | |
| GBP | Halifax House Price Index (YoY) | 9.6% | 10.1% | |
| EUR | ECB Economic Bulletin | |||
| GBP | Services PMI (Apr) | 53.5 | 53.7 | |
| USD | Initial Jobless Claims | 260K | 257K | |
| CAD | Building Permits (MoM) (Mar) | -5.0% | 15.5% | |
| USD | FOMC Member Bullard Speaks | |||
| USD | FOMC Member Bullard Speaks | |||
| USD | FOMC Member Kaplan Speaks | |||
| USD | FOMC Member Lockhart Speaks | |||
| USD | FOMC Member Williams Speaks | |||
| AUD | RBA Monetary Policy Statement |
Government Bond Auctions
Date Time Country Auction
May 04 11:05 Norway Holds bond auction
May 04 11:30 Germany Eur 4bn Apr 2021 Bobl
May 04 11:30 UK Gbp 2.75bn 1.5% 2021 Gilt
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
May 05 11:30 UK Gbp 2.5bn 1.5% 2026 Gilt
May 09 17:20 Italy Announces details of bond auction
May 09 N/A Ireland Details of bond auction on May 12
May 10 11:30 Germany Holds I/L bond auction
May 11 11:03 Sweden Holds bond auction
May 11 11:30 Germany Eur 5bn Jun 2018 Schatz
May 12 11:10 Italy Holds bond auction
May 12 17:20 Sweden Details of I/L auction on May 19
May 12 N/A Ireland Holds bond auction
About the Author
James Hyerczykauthor
James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.
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