USD/JPY Monthly Fundamental Forecast – April 2016

The USD/JPY closed out March at 112.50 seeing a decline of 1.32% after touching a high just days ago. Negative interest rates initiated by the Bank of Japan continued to weigh on the currency.  The Japanese economy continues to struggle, and weak global growth and softness in neighboring China has taken a big bite out of the Japanese export sector. Domestic demand has also fallen, and the situation will not improve unless Japanese consumers open their wallet strings and start spending more. Earlier this week, Japanese consumer spending indicators were mixed. Retail Sales broke a nasty streak of three consecutive declines, posting a gain of 0.5 percent in February. There was better news from Household Spending, which posted a strong gain of 1.2 percent, after five consecutive declines. The BoJ remains under pressure to make a move at the April policy meeting, although it’s questionable whether the BoJ has any remaining monetary tools that would be effective. The central bank adopted negative rates in January, shocking the markets, but this has done little to breathe life into the economy or raise anemic inflation levels.

The BoJ also downwardly revised its total assessment on economy somewhat in March. The central bank stated that the country’s economy continues on its modest rebound trend even if exports and production have been weak mainly because to impact of slowdown in emerging nations. According to the BoJ, production and exports will continue to be sluggish for some time.

FxEmpire provides in-depth analysis for each currency and commodity 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 recent analysis and information in our weekly reports and we provide daily updates and outlooks.

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