USD/JPY Fundamental Forecast – September 1, 2016

The U.S. Dollar edged slightly higher against the Japanese Yen on Wednesday as investors awaited the latest economic news regarding the U.S. economy. The USD/JPY was last reported at 103.259, up 0.304 or +0.30%.

Volume and volatility remained below average early Wednesday as many of the major currency players stayed on the sidelines ahead of Friday’s U.S. Non-Farm Payrolls report. This report could determine whether the timing and the frequency of the next Fed rate hikes.

On Tuesday, the USD/JPY surged after the Conference Board reported that consumer confidence in August rose to its highest level in nearly a year at 101.1.

Early Wednesday, two reports were released by Japan, however, there was very impact on the Forex trade with the majority of traders not willing to take aside ahead of a key jobs report later today from ADP.

Industrial production for July missed the estimate badly, coming in at 0.0%, down from a 2.3% gain in June and well-off the 0.8% forecast. However, year to year housing starts beat the 7.6% estimate with an 8.9% reading. The last report showed a 2.5% decline.

The forecast miss by the industrial production figure came as a surprise since economists were looking for back-to-back months of gains. The news raised fresh concerns about the health of the economy. The data also suggests the Japanese economy was failing to make progress at the start of the third quarter.

Housing starts in Japan rebounded in July, while construction orders logged a double-digit contraction. Additionally, the number of annualized housing starts improved slightly to 1.005 million from 1.004 million in June. Traders were looking for a level of 0.99 million. The good news in housing was offset by a 10.9 percent year-on-year slide in July construction orders. This was the second consecutive fall in orders.

The key market moving event today will be the U.S. ADP Non-Farm Employment Change report. It is expected to show the private sector of the economy added 175K new jobs. A stronger-than-expected number will be bullish for the U.S. Dollar. A weaker number should pressure the USD/JPY, but losses are likely to be limited because of Friday’s Non-Farm Payrolls report.

FxEmpire provides a wide variety of analysis on a daily, weekly and monthly basis ranging from our exceptional technical analysis as well as our in-depth fundamental analysis along with our daily news and market updates. To get the best understanding of each asset it is important to review the short term daily analysis with the longer term monthly reports. To get email notification when each of these are posted please sign up for our daily newsletter.

Today’s economic releases:

Upcoming Economic Events that you should be monitoring:

Thursday, September 1, 2016

Government Bond Auctions

Date/Time Country Type

Aug 31 11:05 Norway Holds bond auction

Aug 31 11:30 Germany Eur 4bn Sep 2018 Schatz

Sep 01 10:30 Spain Holds bond auction

Sep 01 11:30 UK Jul 2022 Gilt

Sep 01 11:50 France Holds bond auction