USD/JPY Fundamental Analysis December 27, 2012 Forecast

Analysis and Recommendation:

The USD/JPY is trading at 85.26 adding 39pts in Asian trading. The main attraction over the holiday has been the JPY. Today newly elected Prime Minister Abe, will be officially installed. The move has come on the back of significant comments from incoming PM Abe. He has suggested that USDJPY levels between 85 and 90 are far more favorable for Japan and has suggested that if the BoJ does not announce a 2% inflation target at its January meeting, then his government will “revise the BoJ law and put together an inflation targeting accord”

Over the weekend, Abe said in an interview that if the Bank of Japan does not comply to his demands that he will seek to change the current laws to give him more control over the BoJ. These words have shaken traders, in most modern advanced economies central banks operate free of political demands and pressure and remain independent so that they can fulfill their mandates. Abe has made it very clear that he would not appoint the current Governor of the Bank to a new term at the expiration in April.

Across the Pacific, US lawmakers continue to bicker and posture without reaching a deal. Congress is scheduled to return on Thursday for a short two days before leaving for the New Year’s holiday. The US crisis needs to be averted prior to the Jan 1, 2013 deadline for budget cuts and tax change expirations. Traders are now starting to determine what economic effects they can foresee if the US cannot reach a negotiated agreement.

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 26, 2012 actual v. forecast

Markets were closed on Christmas day and there were no economic releases or major data reports.

 

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

Government Bond Auction

Date Time Country 

Dec 27 10:10 Italy  

Dec 28 10:10 Italy