USD/JPY Fundamental Analysis – January 6, 2016 – Forecast

Analysis and Recommendation:

The USD/JPY gained 9 points to trade at 119.54 as the yen gained steadily on safe haven trades after Chinese markets crashed and tensions between Saudi Arabia and Iran kept speculators on edge. Tokyo stocks tumbled on the first trading day of 2016 on Monday, with the Nikkei index ending down more than 3 percent, as a further decline in Chinese manufacturing conditions in December stoked ongoing concern about a slowdown in the world’s second-largest economy.

Weak Chinese economic data stirred up risk aversion among investors. The slowdown in China is worrisome around the globe because the country’s manufacturers are huge buyers of raw materials, machinery and energy from other countries. Also, many automakers and consumer goods companies are hoping to sell more to increasingly wealthy Chinese households.

Chinese authorities have been trying for months to restore confidence in the country’s market after a plunge in June rattled global markets and prompted a panicked, multibillion-dollar government intervention.

Finance Minister Taro Aso on Monday called for the swift enactment of the fiscal 2015 extra budget, including measures to ease public concerns following the agreement of the Trans-Pacific Partnership free trade pact.

Overseas investors, who account for more than two-thirds of trading in Tokyo, cut holdings in 2015 even as the Topix index climbed 8.9 percent in dollars and 21 percent in euros. It had been 2½ decades since foreigners last offloaded shares amid annual gains, data compiled by Bloomberg show. As traders dumped $1.9 billion, Japan’s own pension funds, asset managers, central bank and companies took their place.

For Goldman Sachs Group Inc., the home team sending shares higher can only be good, with domestic inflows showing equities can rise without substantial weakness in the yen. Foreigners will return in 2016 on a favorable outlook for earnings and improved corporate governance, according to Japan Asset Management Co.

FxEmpire provides in-depth analysis for each asset 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, which covers the current week and are published by Sunday before the new week begins. Daily we share any new events, forecasts or analysis that affect the current day. To achieve a full accurate understanding it is important that you study all of our data and analysis as a whole.

Today’s economic releases:

 

 

Upcoming Economic Events that you should be monitoring:

Wednesday, January 6, 2016

Government Bond Auctions

Date Time and Country

Jan 06 11:30 Germany Euro 5bn 0% Dec 2017 Schatz

Jan 06 n/a Netherlands Announces details of DSL auction on Jan 12

Jan 07 10:50 France Holds bond auction

Jan 07 11:30 UK GBP1.5bn 4% Jan 2060 Gilt

Jan 07 n/a US Announces details of 3-yr note auction on Jan 12

Jan 07 n/a US Announces details of 10-yr note auction on Jan 13

Jan 07 n/a US Announces details of 30-yr bond auction on Jan 14

Jan 08 17:20 Italy Announces details of BTP/

Jan 11 12:00 Norway Announces details of bond auction on Jan 13

Jan 12 11:00 Austria Holds bond auction

Jan 12 11:00 Netherlands Euro 1-1.5bn 2.5% 2033 DSL

Jan 12 11:30 UK 0.125% 2046 Inflation-linked Gilt

Jan 12 n/a UK Announces details of Gilt auction on Jan 20

Jan 12 19:00 US Holds 3-year note auction

Jan 13 11:05 Norway Holds bond auction

Jan 13 11:10 Italy Holds BTP

Jan 13 11:30 Germany Euro 5bn Feb 2026 Bund

Jan 13 19:00 US Holds 10-year note auction

Jan 14 10:30 Spain Auctions Bonos/Obligaciones (Linkers?)

Jan 14 19:00 US Holds 30-year bond auction

Jan 14 n/a US Announces details of 10-yr TIPS auction on Jan 21

Jan 18 11:00 Belgium Holds OLO auction