USD/JPY Weekly Fundamental Analysis – May 2-6, 2016 – Forecast

The USD/JPY reacted to another surprise from the Bank of Japan which held rates and policy bucking expectations of additional stimulus. The yen strengthened to trade at 1.0645 as the pair fell almost 5% this week, which will hurt the Japanese economy. The weaker US dollar aided the climb of the yen.  he yen rallied to an 18-month high on Friday as investors wagered the Bank of Japan might be done with adding fresh stimulus to the economy, weighing on stock markets around the world.

With Japan on holiday, speculators drove the yen through 107.00 per dollar for the first time since October 2014.Often seen as a sign of broader risk aversion among investors, the move, coupled with a decline on Wall Street overnight, pushed Asian and European stocks into the red.

“With data continuing to show the economy is stuck in a rut and deflation returning, the last thing the BOJ need to see is a stronger yen,” Rabobank analysts wrote in a note on Friday.

“For global markets there are worrying messages here. Conventional monetary policy is at its limits, and, it seems, maybe so is unconventional monetary policy. If so, we are stuck in this environment. This is as good as it gets.” (Reuters)

-The United States on Friday flagged concerns over economic policies in China, Japan, Korea, Taiwan and Germany and put them on a new monitoring list, mostly due to their large surpluses.

It is the first time the U.S. Treasury has implemented provisions passed in Congress this year as part of a trade bill that provided it with new ways to address possible unfair currency practices.

None of the five countries satisfied the criteria for enhanced scrutiny, which is triggered when a country has a significant bilateral trade surplus with the United States, a material current account surplus and engages in persistent one-sided intervention in the currency market.

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:

 

Upcoming Government Bond Auctions

Date Time Country 

Mar 02 13:00 Norway Details of bond auction on Mar 04

May 04 11:05 Norway Holds bond auction

May 04 11:30 Germany Eur 4bn Apr 2021 Bobl

May 04 11:50 France Holds bond auction

May 04 17:20 Sweden Details of bond auction on May 11

May 05 10:30 Spain Holds bond auction

May 05 11:00 Austria Holds bond auction