EUR/JPY Fundamental Analysis – August 7, 2015 – Forecast

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Published: Aug 6, 2015, 04:29 UTC

Analysis and Recommendations: The EUR/JPY dipped 11 points to 136.08 as the euro remained weak against its crosses other than the US dollar which eased

EUR/JPY Fundamental Analysis – August 7, 2015 – Forecast

Analysis and Recommendations:

The EUR/JPY dipped 11 points to 136.08 as the euro remained weak against its crosses other than the US dollar which eased off of recent highs. Traders are focused on tomorrows BoJ meeting. With additional BoJ stimulus unlikely in the foreseeable future, we believe that the trend of yen weakness, which has been closely aligned to the central bank’s quantitative and qualitative easing policies, has run its course in the near term. We have held an overweight Japanese equity exposure since late last year on a 50/50 currency hedged basis. Given our reduced expectations for further BoJ stimulus coupled with our view that the yen offers defensive characteristics in the event of a pick-up in general market volatility, we have decided to remove that hedge.

Notwithstanding our more cautious outlook on the yen, we remain optimistic on the domestic Japanese equity story.

BoJ policymakers have been explicit in their intentions to meet an inflation target of 2% and consistently bullish in their outlook. The market has been skeptical for good reasons. Japan’s economy has struggled to make meaningful improvements since it bounced back from recession late last year, leading the BoJ to push back the timeframe of meeting its inflation target from the fiscal year 2015 to 2016.

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.

Today’s economic releases:

Cur.	Event	Actual	Forecast	Previous
AUD	Employment Change (Jul)	38.5K	10.0K	7.0K
AUD	Full Employment Change (Jul)	12.4K		24.9K
AUD	Unemployment Rate (Jul)	6.3%	6.0%	6.1%

Upcoming Economic Events that you should be monitoring:

Friday, August 7, 2015

Cur.	Event	Actual	Forecast	Previous
JPY	BoJ Press Conference
USD	Nonfarm Payrolls (Jul)		223K	223K
USD	Unemployment Rate (Jul)		5.3%	5.3%
CAD	Employment Change (Jul)		5.0K	-6.4K
CAD	Ivey PMI (Jul)		52.0	55.9