EUR/JPY Monthly Fundamental Forecast October 2014

Outlook and Recommendation

The EUR/JPY ended the month flat at 138.48 as both currencies matched each other’s weakness. The proportion of euro holdings in allocated official reserves dropped by 3.5 percent, the biggest decline since the first quarter of 2009, according to International Monetary Fund figures released yesterday. The euro’s share stood at 24.2 percent in the second quarter from 25 percent in the prior three months, while the dollars rose to 60.7 percent from 60.3 percent.

The euro has tumbled about 10 percent versus the dollar from a 2 1/2-year high reached in May as the ECB unveiled unprecedented stimulus, including purchases of asset-backed securities, to combat a slide in inflation. A weaker currency may suit central bank President Mario Draghi by making exports more competitive, as well as increasing consumer prices on higher import costs.

The ECB is forecast to keep interest rates unchanged at its meeting tomorrow, according to analysts surveyed by Bloomberg News, after unexpectedly dropping them to records Sept. 4. Still, Draghi said Sept. 22 policy makers “stand ready to use additional unconventional instruments” if necessary.

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.

Upcoming Economic Events that you should be monitoring:

Cur.                       Event    

Wednesday, October 1

                 CNY                    Manufacturing PMI                                                       

                 EUR                    German Manufacturing PMI                                                      

                 GBP                     Manufacturing PMI                                                       

                 USD                    ADP Nonfarm Employment Change                                                        

                 USD                    ISM Manufacturing PMI                                               

Thursday, October 2

                 GBP                     Construction PMI                                                          

                 EUR                    Interest Rate Decision                                                  

Friday, October 3

                 GBP                     Services PMI                                                    

                 USD                    Nonfarm Payrolls                                                          

                 USD                    Unemployment Rate                                   

                 USD                    ISM Non-Manufacturing PMI                                                     

Monday, October 6

                 CAD                    Ivey PMI                                                                          

Tuesday, October 7

                 GBP                     Manufacturing Production (MoM)                                          

Thursday, October 9

                 GBP                     Interest Rate Decision                                                

Friday, October 10

                 CAD                    Employment Change                                                  

Monday, October 13

                 CNY                    Trade Balance                                               

Tuesday, October 14

                 EUR                    German ZEW Economic Sentiment                                                                         

Wednesday, October 15

                 CNY                    CPI (YoY)                                                         

                 GBP                     Average Earnings Index +Bonus                               

Thursday, October 16

12:00       EUR                    CPI (YoY)                                                                          

Friday, October 17

15:30       CAD                    Core CPI (MoM)

Government Bond Auction

Date Time Country 

Oct 01 11:03 Sweden Bond auction

Oct 01 11:30 Germany Eur 5.0bn Aug 2024 Bund auction

Oct 01 11:30 UK Auctions 2% 2020 Gilt

Oct 02 10:30 Spain Bono/Obligacion auction

Oct 02 17:00 US Announces details of 3/10Y Note