USD/JPY Weekly Fundamental Analysis July 16-20, 2012, Forecast

Posted July 14, 2012 13:48 (GMT) | By FX Empire Analyst - Barry Norman | Print | Font Size
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Introduction: In the USD/JPY trade, trying to pick tops or bottoms during that time would have been difficult. However, with the bull trend so dominant, the far easier and smarter trade was to look for technical opportunities to go with the fundamental theme and trade with the market trend rather than to trying to fade it.
Against the Japanese yen, whose central bank held rates steady at zero, the dollar appreciated 19% from its lowest to highest levels. USD/JPY was in a very strong uptrend throughout the year, but even so, there were plenty of retraces along the way. These pullbacks were perfect opportunities for traders to combine technicals with fundamentals to enter the trade at an opportune moment.

The interest rate differential between the Bank of Japan(BoJ) and the Federal Reserve
Japanese government intervention to maintain their currency sends USD/JPY lower

Weekly Analysis and Recommendation:

The USD/JPY is trading at 79.19. The yen was strong against the USD all week, beginning the week at 79.57 and continuing to push the USD all week, in small increments as risk aversion remained the main focus. The pair continues to trading in the low 79 range.

This week the BoJ concluded their two day meeting making no changes to policy or rates, except some adjustments.

Date	Last	Open	High	Low	Change %
Jul 13, 2012	79.19	79.33	79.39	79.08	-0.18%
Jul 12, 2012	79.33	79.61	79.96	79.19	-0.35%
Jul 11, 2012	79.61	79.36	79.79	79.14	0.32%
Jul 10, 2012	79.36	79.57	79.58	79.21	-0.27%
Jul 09, 2012	79.57	79.50	79.76	79.48	0.09%

On Friday, after release of the Chinese GDP investors began moving away from risk looking for higher risk assets. The pair was not able to rebound but are expected to in the coming week. Markets were so focused on Chinese data that poor eco data in Japan was ignored. Japanese Industrial Production fell in a report on Friday.

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 of July 9 – 13 actual v. forecast for Yen, the Aussie, the Kiwi and USD

Date	Currency	Event	Actual	Forecast	Previous
Jul 9	AUD	ANZ Job Advertisements m/m	-1.2%		-2.6%
	NZD	REINZ HPI m/m	0.3%		1.7%
	NZD	NZIER Business Confidence	-4		13
Jul 10	AUD	NAB Business Confidence	-3		-2
Jul 10	JPY	Tertiary Industry Activity m/m	0.7%	0.2%	-0.2%
Jul 11	AUD	Westpac Consumer Sentiment	3.7%		0.3%
	AUD	Home Loans m/m	-1.2%	0.8%	0.5%
	USD	Trade Balance	-48.7B	-48.5B	-50.6B
	USD	Crude Oil Inventories	-4.7M	-1.3M	-4.3M
Jul 12	AUD	MI Inflation Expectations	3.3%		2.3%
	AUD	Employment Change	-27.0K	0.2K	27.8K
	AUD	Unemployment Rate	5.2%	5.2%	5.1%
	JPY	Overnight Call Rate	<0.10%	<0.10%	<0.10%
	USD	Unemployment Claims	350K	376K	376K
	USD	Import Prices m/m	-2.7%	-1.5%	-1.2%
	USD	Federal Budget Balance	-59.7B	-91.7B	-124.6B
Jul 13	USD	PPI m/m	0.1%	-0.5%	-1.0%
Jul 13	USD	Prelim UoM Consumer Sentiment	72.0	73.5	73.2

Historical:

Highest: 108.00 on Sep 19, 2008

Average: 87.08over this period

Lowest: 75.58 on Oct 31, 2011

Economic Highlights of the coming week that affect the AUD, JPY, NZD and USD

Date	Time	Currency	Event	Previous
Jul 16	12:30	USD	Retail Sales m/m	-0.2%
	12:30	USD	Empire State Manufacturing Index	2.3
	14:00	USD	Business Inventories m/m	0.4%
	22:45	NZD	CPI q/q	0.5%
Jul 17	1:30	AUD	New Motor Vehicle Sales m/m	2.4%
	9:15	ALL	G7 Meetings
	12:30	USD	CPI m/m	-0.3%
	13:00	USD	TIC Long-Term Purchases	25.6B
	13:15	USD	Capacity Utilization Rate	79.0%
	13:15	USD	Industrial Production m/m	-0.1%
Jul 18	0:30	AUD	MI Leading Index m/m	0.5%
	12:30	USD	Building Permits	0.78M
	12:30	USD	Housing Starts	0.71M
	14:30	USD	Crude Oil Inventories	-4.7M
Jul 19	1:30	AUD	NAB Quarterly Business Confidence	-1
	12:30	USD	Unemployment Claims
	14:00	USD	Existing Home Sales	4.55M
	14:00	USD	Philly Fed Manufacturing Index	-16.6
Jul 20	1:30	AUD	Import Prices q/q	-1.2%

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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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