USD/JPY Fundamental Analysis – August 20, 2015 – Forecast

Analysis and Recommendation:

The USD/JPY declined 14 points in the early session to trade at 124.46 after the release of export data in the morning session.  The dollar rose against the euro, getting a lift from data showing U.S. housing starts close to an eight-year peak, which bolstered expectations the Federal Reserve will raise interest rates as soon as next month. A 6-percent drop in Chinese stocks drove many investors into safe-haven currencies such as the yen and the Swiss franc, which were up against the dollar.

 “There is a risk-off environment, given the drop in the Chinese stock markets. Investors are cautious about whether the Fed will raise rates, given a slowdown in China and global deflationary conditions,” said Petra Kanata, FX strategist at ING. Treasury investors were looking to Wednesday, when U.S. inflation data will be published, as well as minutes from the Fed’s most recent policy meeting. Both releases will be scoured for clues on when the Fed will end near-zero interest rates and raise some short-term rates for the first time in nearly a decade.

Japan’s trade deficit narrowed a less-than-expected 72.3 percent in July from a year ago, as the cost of energy imports kept falling, but the volume of exports stumbled, official data showed Wednesday.

The finance ministry said Japan’s monthly deficit came in at 268.05 billion yen ($2.15 billion), well below 966.5 billion yen a year earlier, although economists had predicted the shortfall would shrink to around 53 billion yen.

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:

 

Upcoming Economic Events that you should be monitoring:

Thursday August 20, 2015

Government Bond Auctions

Date Time Country

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