USD/JPY Monthly Fundamental Forecast October 2012

Posted October 01, 2012 6:14 (GMT) | By FX Empire Analyst - Barry Norman | Print | Font Size
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Outlook and Recommendation

The USD/JPY closed the month at 77.88. . JPY has benefitted from the depth of its bond market and an ongoing demand for safe haven assets; US – Japanese two-year spreads suggest a clear catalyst for yen weakness. Japanese policymakers are concerned about appreciation, but have yet to move towards intervention. Japanese fundamentals, including loose Bank of Japan policy, are a weight. We expect yen strength to be limited and a weakening trend to develop into year-end

Highest: 79.22	Lowest: 77.14	Difference: 2.08	Average: 78.18	Change %: -0.52

Persistent strength in JPY is an ongoing concern for the Ministry of Finance; however, intervention is unlikely to be the favored FX tool. Over the last two-weeks of September, US-Japanese two-year bond yield spreads rose from their lows as the surprise ¥10trn expansion of the BoJ asset purchase program served to counteract previous Fed easing. USDJPY appears poised to rally back towards our year-end forecast of 80.

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.

Central Bank The Bank of Japan -

Date of next meeting or last meeting: Sep 19, 2012

Current Rate: 0.100%

Statement highlights of last meeting: The pick-up in Japan’s economic activity has come to a pause. Exports and industrial production have been relatively weak as overseas economies have moved somewhat deeper into a deceleration phase. On the other hand, domestic demand has been resilient, mainly supported by reconstruction-related demand. Specifically, public investment has continued to increase. Business fixed investment has been on a moderate increasing trend with improvement in corporate profits. Private consumption has been resilient with the employment situation on an improving trend. Housing investment has generally been picking up.

Economic events for the month of October affecting AUD, JPY, NZD and USD

Date	Time	Currency	Event	Forecast	Previous
Oct 1	14:00	USD	ISM Manufacturing PMI	50.0	49.6
Oct 2	4:30	AUD	Cash Rate	3.50%	3.50%
	4:30	AUD	RBA Rate Statement
Oct 3	1:30	AUD	Trade Balance	-0.62B	-0.56B
	12:15	USD	ADP Non-Farm Employment Change	148K	201K
	14:00	USD	ISM Non-Manufacturing PMI	53.4	53.7
Oct 4	1:30	AUD	Building Approvals m/m	4.8%	-17.3%
	1:30	AUD	Retail Sales m/m	0.5%	-0.8%
	12:30	USD	Unemployment Claims	371K	359K
	18:00	USD	FOMC Meeting Minutes
Oct 5	12:30	USD	Non-Farm Employment Change	111K	96K
	12:30	USD	Unemployment Rate	8.2%	8.1%
Oct 8	21:00	NZD	NZIER Business Confidence		-4
	23:50	JPY	Current Account		0.34T
Oct 11	0:30	AUD	Employment Change		-8.8K
	0:30	AUD	Unemployment Rate		5.1%
	12:30	USD	Trade Balance		-42.0B
Oct 12	12:30	USD	PPI m/m		1.7%
	13:55	USD	Prelim UoM Consumer Sentiment
Oct 15	12:30	USD	Core Retail Sales m/m		0.8%
	12:30	USD	Retail Sales m/m		0.9%
	21:45	NZD	CPI q/q
Oct 16	0:30	AUD	Monetary Policy Meeting Minutes
	12:30	USD	Core CPI m/m
Oct 18	14:00	USD	Philly Fed Manufacturing Index
Oct 19	14:00	USD	Existing Home Sales
Oct 24	0:30	AUD	CPI q/q
	14:00	USD	New Home Sales
	18:15	USD	FOMC Statement
	20:00	NZD	Official Cash Rate
	20:00	NZD	RBNZ Rate Statement
Oct 25	12:30	USD	Core Durable Goods Orders m/m
	14:00	USD	Pending Home Sales m/m
Oct 26	12:30	USD	Advance GDP q/q		1.3%
Oct 30	14:00	USD	CB Consumer Confidence
Oct 31	0:00	NZD	NBNZ Business Confidence
	0:30	AUD	Building Approvals m/m

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About: FX Empire Analyst - Barry Norman

Barry produces a private Daily Market Review newsletter that is distributed around the globe to over 25,000 subscribers and recently published a book on Options Trading that is available from amazon.com

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