USD/JPY Fundamental Analysis December 11, 2012, Forecast

Analysis and Recommendation:

The USD/JPY is trading this morning at 82.49 flat to Friday’s close. The weekend saw the monthly data dump from Japan, which was mostly negative as expected. The Japanese economy continues to decline and shrink, even with monetary stimulus flowing from the Bank of Japan, but it might be too soon to see results from the stimulus and with elections just days away on December 16th, it is likely that there will be a new Prime Minister with a new direction for Japanese economic policy.

Japan fell into recession in the second and third quarters, fueling opposition leader Shinzo Abe’s calls for more stimulus and highlighting the risk that weak growth will derail a planned sales-tax rise.

GDP contracted at an annualized 3.5 percent in the three months through September, the Cabinet Office’s second estimate showed in this morning, matching a preliminary reading. The government revised the previous quarter to a 0.1 percent contraction, matching the textbook definition of a recession.

The BOJ Policy Board under Gov. Masaaki Shirakawa, who will step down in April, has done “too little, too late,” Ito, dean of the University of Tokyo’s Graduate School of Public Policy, said Thursday in Tokyo.

The BOJ should have started its asset purchase program earlier, and it has been “extremely passive in building inflation expectations,” he said.

Ito’s criticism of the central bank echoes that of Shinzo Abe, whose Liberal Democratic Party is leading in polls to win the Dec. 16 Lower House election. Abe’s call for the bank to introduce unlimited easing and set an inflation target of 2 percent sent the yen to a seven-month low last month.

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.

Economic Data December 9-10, 2012 actual v. forecast

 

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

Government Bond Auction

Date Time Country 

Dec 11 09:30 Spain 

Dec 11 10:10 Greece 

Dec 11 10:15 Austria 

Dec 11 10:30 Belgium 

Dec 11 10:30 UK 

Dec 11 18:00 US 

Dec 12 10:10 Italy  

Dec 12 10:10 Sweden 

Dec 12 10:30 Swiss 

Dec 12 16:30 US 

Dec 13 01:30 Japan 

Dec 13 09:30 Spain 

Dec 13 10:10 Italy  

Dec 13 10:30 UK 

Dec 13 16:00 US 

Dec 13 18:00 US 

Dec 14 11:00 Belgium 

Dec 14 15:30 UK