USD/JPY Weekly Fundamental Analysis September 17-21, 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 bounced back up on Friday to trade at 78.39 with the pair locked back in the tight range in the lower 78. The pair had fallen as low as 77.14 as the USD weakened as markets hopes for stimulus from the Feds. After Mr. Bernanke’s announcements markets rejoiced in the depth of the program offered, and the USD collapsed against most of the crosses, except against the JPY.

Date

Last

Open

High

Low

Change %

Sep 14, 2012

78.39

77.64

78.40

77.52

0.95%

Sep 13, 2012

77.66

77.83

77.83

77.14

-0.23%

Sep 12, 2012

77.83

77.77

77.97

77.74

0.08%

Sep 11, 2012

77.77

78.24

78.25

77.70

-0.60%

Sep 10, 2012

78.24

78.24

78.33

78.19

0.00%

Asian markets will be principally driven by the global market tone in the wake of the Fed and given Eurozone risks over the upcoming week, but several first-tier regional factors pose additional local market risk.  China risk returns following a wave of soft growth and inflation figures that are prompting stimulus talk.  This time it lands in the form of the private version of China’s purchasing managers’ index for the manufacturing sector which has been in contraction throughout the year.  It has recently been joined in contraction by a contracting state’s manufacturing PMI.  Japan’s Democratic Party holds a leadership vote at the end of the week, and this will pit Prime Minister Yoshihiko Noda against three contenders.  Noda is the favorite as Japan gears up for elections as soon as next month, and the polls are not being kind to his party in part due to his decision to sharply raise the sales tax rate in order to fund the country’s massive debt position. 

The Bank of Japan also makes a rate decision against this highly politicized back-drop, and has been under enormous pressure to debase a strong yen.  The Reserve Bank of India is expected to keep its policy rate unchanged next week. The RBA minutes and New Zealand GDP round out the week’s regional news.

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 September 10-14, 2012 actual v. forecast for Yen, the Aussie, the Kiwi and US

Date

Time

Currency

Event

Actual

Forecast

Previous

Sep. 10

00:50

JPY

Adjusted Current Account 

0.34T

0.39T 

0.77T 

 

00:50

JPY

GDP (QoQ) 

0.2%

0.3% 

0.3% 

 

02:30

AUD

Home Loans (MoM) 

-1.0%

0.1% 

1.0% 

Sep. 11

00:50

JPY

BSI Large Manufacturing Conditions 

2.5

-6.1 

-5.7 

 

02:30

AUD

NAB Business Confidence 

-2

 

 

13:30

USD

Trade Balance 

-42.0B

-44.0B 

-41.9B 

 Sep. 12

00:50

JPY

Tertiary Industry Activity Index (MoM) 

-0.8%

-0.4% 

0.2% 

 

01:30

AUD

Westpac Consumer Sentiment 

1.60%

 

-2.50% 

 

13:30

USD

Import Price Index (MoM) 

0.7%

1.4% 

-0.7% 

 

18:00

USD

10-Year Note Auction 

1.764%

 

1.680% 

 

22:00

NZD

Interest Rate Decision 

2.50%

2.50% 

2.50% 

 Sep. 13

13:30

USD

Core PPI (MoM) 

0.2%

0.2% 

0.4% 

 

13:30

USD

PPI (MoM) 

1.7%

1.1% 

0.3% 

 

13:30

USD

Initial Jobless Claims 

382K

370K 

367K 

 

13:30

USD

Continuing Jobless Claims 

3283K

3318K 

3332K 

 

13:30

USD

PPI (YoY) 

2.0%

1.4% 

0.5% 

 

13:30

USD

Core PPI (YoY) 

2.5%

2.6% 

2.5% 

 

17:30

USD

Interest Rate Decision 

0.25%

0.25% 

0.25% 

 

19:00

USD

Federal Budget Balance 

-191.0B

-155.0B 

-69.6B 

Sep. 14

05:30

JPY

Industrial Production (MoM) 

-1.0%

-1.2% 

-1.2% 

 

13:30

USD

Core CPI (MoM) 

0.1%

0.2% 

0.1% 

 

13:30

USD

Core Retail Sales (MoM) 

0.8%

0.6% 

0.8% 

 

13:30

USD

CPI (MoM) 

0.6%

0.5% 

0.0% 

 

13:30

USD

Retail Sales (MoM) 

0.9%

0.7% 

0.6% 

 

13:30

USD

CPI (YoY) 

1.7%

1.7% 

1.4% 

 

13:30

USD

Core CPI (YoY) 

1.9%

2.0% 

2.1% 

 

14:15

USD

Industrial Production (MoM) 

-1.2%

0.2% 

0.5% 

 

14:55

USD

Michigan Consumer Sentiment 

79.2

74.0 

74.3 

Historical: From 2010 to present

Highest: 94.99 on May 05, 2011

Average: 82.77 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

Forecast

Previous

Sep. 17

13:30

USD

NY Empire State Manufacturing Index 

-2.0 

-5.8 

Sep. 18 

13:30

USD

Current Account 

-126.0B 

-137.3B 

 

14:00

USD

TIC Net Long-Term Transactions 

 

9.3B 

 

23:45

NZD

Current Account 

-1.64B 

-1.31B 

Sep. 19 

13:30

USD

Building Permits 

0.800M 

0.811M 

 

13:30

USD

Housing Starts 

0.765M 

0.746M 

 

15:00

USD

Existing Home Sales 

4.56M 

4.47M 

 

23:45

NZD

GDP (QoQ) 

0.3% 

1.1% 

Government Bond Auction

Date Time Country 

Sep 17 09:10 Slovakia

Sep 17 10:00 Norway 

Sep 18 08:30 Spain 

Sep 18 09:10 Greece 

Sep 18 09:30 Belgium 

Sep 19 09:10 Sweden 

Sep 19 09:30 Germany 

Sep 19 09:30 Portugal 

Sep 19 10:00 Norway 

Sep 20 08:30 Spain 

Sep 20 08:50 France 

Sep 20 09:30 UK 

Sep 20 09:50 France 

Sep 20 15:00 US 

Sep 20 17:00 US 

Sep 21 15:30 Italy  

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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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