USD/JPY Forecast Dec. 20, 2011, Fundamental Analysis

The USD/JPY pair advanced with the beginning of the week, as the US dollar soared against other major currencies amid risk aversion that dominated the FX market after the reported death of North Korean leader Kim Jong-il that raised fears over the stability in the region and especially for Japan as it is the most exposed growth and security wise.

Investors will be avoiding new positions the next two weeks as the year reached its end, where the current sentiment support the dollar as a safe haven currency amid the instability in the financial market.

On the other hand, market awaits the last BOJ meeting in 2011 in which the bank could take further measures to increase liquidity and prevent the yen from increasing further.

On Tuesday at 04:30 GMT, the Japanese economy will issue the All Industry Activity Index for October where it’s expected at 1.1% compare to the previous drop of 0.9%.

At 05:00 GMT, the Japanese Leading Index for October will be released, where the prior reading was 91.5, while the Coincident Index for October had a previous reading of 90.3.

The U.S. economy will release the Housing Starts for November at 13:30 GMT, where it’s expected to show a rise of 0.3% to 630 thousand compare to the prior drop of 0.3%.

As for the U.S. Building Permits it’s expected to drop 1.4% to 635 thousand from 653 thousand.