EUR/JPY Fundamental Analysis May 9, 2014 Forecast

Analysis and Recommendations:

The EUR/JPY  is in the red this morning at 141.70 but without direction as the euro and the JPY continue to gain. The OECD urged Prime Minister Shinzo Abe’s government to promote structural reforms and raise Japan’s consumption tax rate to 10 percent next year as scheduled to attain its goal of restoring the country’s precarious fiscal health.

“While the recent pick-up in inflation is encouraging, it could undermine the recovery unless it is accompanied by a matching rise in wages,” the OECD said, expressing concern over the potential negative impact of a sharp increase in consumer prices, as the Bank of Japan is implementing aggressive monetary easing to haul the country out of deflation.

In Japan, fears are lingering that wages are unlikely to grow at a pace that can help prevent a downturn in consumer spending and investment following price rises, including the effects of the 3-percentage-point consumption tax hike to 8 percent from April 1.

Tokyo’s consumer prices, seen as indicating nationwide price moves down the road, climbed 2.7 percent in April from a year earlier, the biggest increase in 22 years.

Meanwhile expectations for the policy meeting of the European Central Bank Thursday were for no change in policy. “We doubt that recent events and data releases have been significant enough to ensure more policy action from the ECB,” said Jennifer McKeon at Capital Economics.

“We expect a very dovish tone from (ECB chief Mario) Draghi to hint that such action might be taken at the June meeting.”

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.

Economic Data May 8, 2014 actual v. forecast

 

Upcoming Economic Events that affect the AUD, NZD, JPY and USD

Government Bond Auction

Date Event

May 12 EUR German 30-y Bond Auction

May 12 GBP 30-y Bond Auction

May 12 JPY 30-y Bond Auction

May 13 EUR Italian 10-y Bond Auction

May 14 USD Crude Oil Inventories

May 15 EUR Spanish 10-y Bond Auction

May 15 USD Natural Gas Storage

May 16 GBP 10-y Bond Auction

May 16 GBP 30-y Bond Auction

May 21 EUR German 10-y Bond Auction