USD/JPY Fundamental Analysis – August 13, 2015 – Forecast

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Published: Aug 12, 2015, 04:04 UTC

Analysis and Recommendation: The USD/JPY traded in the green at 125.19 moving towards the top of the range after the BoJ meeting minutes ahead of

USD/JPY Fundamental Analysis – August 13, 2015 – Forecast

Analysis and Recommendation:

The USD/JPY traded in the green at 125.19 moving towards the top of the range after the BoJ meeting minutes ahead of industrial production data due later in the session. The pair gained 6 points against a weaker US dollar as trades moved away from the yen. China’s 2 percent devaluation of the yuan on Tuesday pushed the dollar higher and hit Wall Street and other global equity markets as it raised fears of a new round of currency wars and fed worries about slowing Chinese economic growth.

U.S. stock indexes slumped more than 1 percent and stocks also fell in Asia and Europe as investors contemplated the implications of a move designed to support China’s slowing economy and exports.

The dollar was firmer above ¥124.50 in Tokyo trading on Tuesday, backed by the Chinese central bank’s surprise devaluation of its currency against the greenback.

Investors are now wondering whether China’s devaluation will keep the Federal Reserve from raising U.S. rates in September as many anticipate.

“People seem to be trading this as a reason for Fed delay,” said Michael Wallace, global market strategist at Action Economics in San Francisco. “This puts the Fed tightening horizon back on the table in terms of discussion.”

The big question now for emerging markets, where economic growth has slowed and capital flight has increased, is whether their officials respond to China’s move in kind.

“The key will be the response of other central banks. … There should be further pressure on the currencies of China’s trade partners,” said Nick Lawson, managing director at Deutsche Bank in London.

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 up to the data analysis and information in our weekly reports.

Today’s economic releases:

Cur.	Event	Actual	Forecast	Previous
USD	API Weekly Crude Oil Stock	-0.847M	-1.800M	-2.400M
JPY	Monetary Policy Meeting Minutes
AUD	Westpac Consumer Sentiment (Aug)	7.8%		-3.2%
AUD	Wage Price Index (QoQ) (Q2)	0.6%	0.6%	0.5%
JPY	Industrial Production (MoM) (Jun)		0.8%	0.8%
JPY	Tertiary Industry Activity Index		0.1%	-0.7%
CNY	Fixed Asset Investment (YoY) (Jul)		11.5%	11.4%
CNY	Industrial Production (YoY) (Jul)		6.6%	6.8%

Upcoming Economic Events that you should be monitoring:

Friday, August 14, 2015

Cur.	Event	Actual	Forecast	Previous
NZD	Core Retail Sales (QoQ)		0.7%	2.9%
EUR	German GDP (QoQ) (Q2)		0.5%	0.3%
EUR	Core CPI (YoY) (Jul)		1.0%	1.0%
EUR	CPI (MoM) (Jul)		-0.6%	0.0%
EUR	GDP (QoQ) (Q2)		0.4%	0.4%
USD	PPI (MoM) (Jul)		0.1%	0.4%
CAD	Manufacturing Sales (MoM) (Jun)		2.1%	0.1%
USD	Industrial Production (MoM) (Jul)		0.3%	0.3%
USD	Michigan Consumer Sentiment (Aug)		93.5	93.1