USD/JPY Weekly Fundamental Analysis July 23-27, 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 ended the week at 78.49. After breaking out of its trap between the mid to low 79.’s the pair moved right back into another week of range trading, holding between the 78.99 and the 79.50 range bouncing around all week, with a slow downtrend as the JPY continues to build steam. The problem facing the currency remains unknowns from the Bank of Japan and intervention by the Ministry of Finance.

Date

Last

Open

High

Low

Change %

Jul 20, 2012

78.49

78.75

78.80

78.45

-0.32%

Jul 19, 2012

78.75

78.80

78.80

78.44

-0.07%

Jul 18, 2012

78.80

79.08

79.13

78.76

-0.36%

Jul 17, 2012

79.09

78.84

79.17

78.82

0.31%

Jul 16, 2012

78.84

79.18

79.20

78.69

-0.44%

Although markets remain in risk aversion, it is a very specific current, drifting towards the JPY, other safe havens are not seeing the same action and this could change quickly.

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 16 – 20 actual v. forecast for Yen, the Aussie, the Kiwi and USD

Date

Currency

Event 

Actual

Forecast

Previous

Jul 16

USD

Core Retail Sales m/m

-0.4%

0.1%

-0.4%

 

USD

Retail Sales m/m

-0.5%

0.1%

-0.2%

 

USD

Empire State Manufacturing Index

7.4

3.9

2.3

 

USD

Business Inventories m/m

0.3%

0.2%

0.3%

 

NZD

CPI q/q

0.3%

0.5%

0.5%

Jul 17

AUD

New Motor Vehicle Sales m/m

-0.6%

 

2.3%

 

USD

Core CPI m/m

0.2%

0.2%

0.2%

 

USD

CPI m/m

0.0%

0.0%

-0.3%

 

USD

TIC Long-Term Purchases

55.0B

45.7B

27.2B

 

USD

Capacity Utilization Rate

78.9%

79.2%

78.7%

 

USD

Industrial Production m/m

0.4%

0.4%

-0.2%

Jul 18

AUD

MI Leading Index m/m

0.8%

 

0.5%

 

USD

Building Permits

0.76M

0.77M

0.78M

 

USD

Housing Starts

0.76M

0.74M

0.71M

 

USD

Crude Oil Inventories

-0.8M

0.5M

-4.7M

Jul 19

AUD

NAB Quarterly Business Confidence

-2

 

-1

 

USD

Unemployment Claims

386K

367K

352K

 

USD

Existing Home Sales

4.37M

4.64M

4.62M

 

USD

Philly Fed Manufacturing Index

-12.9

-7.9

-16.6

Jul 20

AUD

Import Prices q/q

2.4%

1.6%

-1.2%

Historical:

Highest: 108.00 on Sep 19, 2008

Average: 87.08 over 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 23

1:30

AUD

PPI q/q

-0.3%

Jul 24

13:00

USD

Flash Manufacturing PMI

52.5

22:45

NZD

Trade Balance

301M

23:50

JPY

Trade Balance

-0.66T

Jul 25

0:00

AUD

CB Leading Index m/m

-1.4%

1:30

AUD

CPI q/q

0.1%

1:30

AUD

Trimmed Mean CPI q/q

0.3%

14:00

USD

New Home Sales

369K

14:30

USD

Crude Oil Inventories

 

21:00

NZD

Official Cash Rate

2.50%

21:00

NZD

RBNZ Rate Statement

 

Jul 26

0:10

JPY

BOJ Gov Shirakawa Speaks

 

12:30

USD

Core Durable Goods Orders m/m

0.7%

12:30

USD

Unemployment Claims

 

14:00

USD

Pending Home Sales m/m

5.9%

23:30

JPY

Tokyo Core CPI y/y

-0.6%

23:50

JPY

Retail Sales y/y

3.6%

Jul 27

12:30

USD

Advance GDP q/q

1.9%

13:55

USD

Revised UoM Consumer Sentiment

72.0

 

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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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