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

Barry Norman

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

   

Government Bond Auctions

Date Time Country

Aug 06 10:30 Spain Auctions Bonos

Aug 06 11:10 France Auctions OATs

Aug 10 17:30 Italy Announces details of BTP/CCTeu on 13 Aug

Aug 11 11:30 UK Auctions 0.125% 2058 I/L Gilt

Aug 12 11:30 Germany Eur 4bn Aug 2025 Bund

Aug 13 11:10 Italy Auctions BTPs/CCTeus

Aug 19 11:30 Germany Eur 5bn Sep 2017 Schatz

Aug 19 11:03 Sweden Holds bond auction

Aug 20 10:30 Spain Auctions Bonos/Obligaciones

Aug 20 11:30 UK Auctions 4.25% 2036 Gilt

Aug 21 17:30 Italy Announces details of CTZ/BTPei on 26 Aug

 

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