USD/JPY Weekly Fundamental Analysis – February 1-5, 2016 -Forecast

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Published: Jan 30, 2016, 13:16 UTC

Weekly Analysis and Recommendation: The USD/JPY ended the week with the pair climbing 1.97 this week. The pair is trading at 121.13. The stronger yen in

USD/JPY Weekly Fundamental Analysis – February 1-5, 2016 -Forecast

Weekly Analysis and Recommendation:

The USD/JPY ended the week with the pair climbing 1.97 this week. The pair is trading at 121.13. The stronger yen in turn has threatened to tip Japan’s economy back into deflation, which the central bank has struggled to vanquish. The rising yen has also put more pressure on corporate profits and helped push Japanese stocks into bear market territory last week.

So when the Bank of Japan announced its plan to lower interest rates below zero for the first time Friday, it makes sense that Governor Haruhiko Kuroda named just one country among the risks facing its economy

The Bank of Japan said it is imposing a 0.1 percent fee on some deposits left with the central bank, effectively a negative interest rate. It hopes that will encourage commercial banks to lend more and stimulate investment and growth. Latest data showed Japan’s core inflation rate slipped 0.5 percent in 2015 on low oil prices while consumer spending fell 4.4 percent in December over a year earlier.

The US dollar index, which measures the greenback against a basket of currencies, touched its lowest level in almost two weeks after US durable goods orders unexpectedly slumped 5.1 percent last month, raising concern about a weak US fourth-quarter gross domestic product report today and stoking speculation the Fed won’t be in a hurry to raise interest rates further. Economists polled by Reuters had expected a 0.6 percent drop in orders

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.

Major Economic Events for the week:

	Cur.	Event	Actual	Forecast	Previous
Monday, February 1, 2016
	CNY	Manufacturing PMI (Jan)		49.6	49.7
	CNY	Caixin Manufacturing PMI (Jan)		48.0	48.2
	EUR	German Manufacturing PMI (Jan)		52.1	52.1
	GBP	Manufacturing PMI (Jan)		51.8	51.9
	USD	ISM Manufacturing PMI (Jan)		48.0	48.2
Tuesday, February 2, 2016
	AUD	Interest Rate Decision (Feb)		2.00%	2.00%
	EUR	German Unemployment Change (Jan)		-7K	-14K
	GBP	Construction PMI (Jan)		57.6	57.8
Wednesday, February 3, 2016
	NZD	Employment Change (QoQ) (Q4)			-0.4%
	GBP	Services PMI (Jan)		55.4	55.5
	USD	ADP Nonfarm Employment Change (Jan)		195K	257K
	USD	ISM Non-Manufacturing PMI (Jan)		55.1	55.3
	USD	Crude Oil Inventories			8.383M
Thursday, February 4, 2016
	GBP	Interest Rate Decision (Feb)		0.50%	0.50%
Friday, February 5, 2016
	AUD	Retail Sales (MoM) (Dec)		0.5%	0.4%
	USD	Nonfarm Payrolls (Jan)		190K	292K
	USD	Unemployment Rate (Jan)		5.0%	5.0%
	CAD	Employment Change (Jan)		6.0K	22.8K
	CAD	Ivey PMI (Jan)		50.3	49.9