USD/JPY Fundamental Analysis – December 9, 2015 -Forecast

Analysis and Recommendation:

The USD/JPY dipped 25 points to trade at 123.14 after soaring higher on Monday. Markets reversed trends as the greenback eased this morning, but disappointing Japanese GDP numbers limited moves this morning. Japan’s current account surplus grew 72.3 percent from a year earlier in October, the 16th consecutive month of surplus, boosted by plunging oil imports and an increase in the travel surplus, the government said Tuesday.

The surplus in the current account balance — one of the widest gauges of a country’s international trade — stood at 1.46 trillion yen ($11.83 billion) and was also lifted by a goods trade surplus of 200.2 billion yen, the Finance Ministry said.

The goods trade logged the surplus against a deficit of 764.9 billion yen a year earlier, with exports falling 3.7 percent to 6.33 trillion yen while imports declined 16.4 percent to 6.13 trillion yen, the ministry said in a preliminary report. The value of crude oil imports dropped 49.2 percent as average oil prices shed 52.5 percent to $47.88 per barrel during the month. The value of liquefied natural gas imports fell 42.4 percent.

The yen dropped versus the U.S. dollar by 11.1 percent year-on-year in the reporting month — to an average 120.06 to the dollar. A weaker yen usually supports exports by making Japanese products cheaper abroad and lifts the value of overseas revenues in yen terms.

Japan’s economy dodged a technical recession in the third quarter as business investment perked up, revised data showed Tuesday, easing pressure on the Bank of Japan to provide more stimulus next month. Revised government data on Tuesday showed Japan’s gross domestic product (GDP) in the third quarter rose at a 1 percent annualized rate, compared with a preliminary reading of a 0.8 percent contraction.

Business investment during the quarter climbed 0.6 percent in the third quarter, reversing the preliminary 1.3 percent quarterly drop.

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Today’s economic releases:

 

Upcoming Economic Events that you should be monitoring:

Wednesday, December 9, 2015

Government Bond Auctions

Date Time Country

Dec 08 11:30 UK 3.5% 2045 Gilt auction

Dec 08 19:00 US Holds 3-year note auction

Dec 09 11:03 Sweden Holds bond auction

Dec 09 11:05 Norway Holds bond auction

Dec 09 11:30 Germany Eur 3bn Dec 2017 Schatz

Dec 09 19:00 US Holds 10-year note auction

Dec 10 19:00 US Holds 30-year bond auction

Dec 11 11:10 Italy Auctions BTPs/CCTeus