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

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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

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%

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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