USD/JPY Fundamental Analysis March 2, 2012, Forecast

Economic Events: (GMT)

The economic calendar is very light for Friday, with the 1^st falling on Thursday. These events will have little or no significance. There are also no events scheduled in the US.

 

Analysis and Recommendation: (close of Asian session)

USD/JPY was trading at 80.99 after capital spending came in well below forecast. Japanese fourth quarter capital spending rose 7.6 percent following a 9.8 percent decline the previous month, besting expectations of a 6.5 percent decline. The positive figure indicates a potential unexpected rebound in growth as corporations in Japan invest more in their businesses.

Analysts did not expect an increase in capital spending this month, and this reflects the series’ biggest increase since March 2007. As traders balanced their portfolios in response to the unforeseen change in capital expenditures, the USDJPY fell, hitting 80.99.

The European Central Bank said it committed 529.5 billion euro in its much-anticipated and well-received second auction of three-year loans to the banking sector to app. 800 banks

Fed Chairman Bernanke’s testimony pointed to “improved data while citing persistent downside risks to the outlook.” With comments by Bernanke lacking a dovish tone that some had expected, the U.S. dollar rose back above the 81-yen level, helping many major Japanese exporter stocks move higher.

China’s manufacturing gained momentum; helped by strength in new orders, export demand and production, though inflation pressures remain a concern, according to a survey released on Thursday.

The state-affiliated China Federation of Logistics and Purchasing said its purchasing managers index, or PMI, rose 0.5 points to 51.0 from January’s 50.5 and December’s figure of 50.3 in a third straight month of steady improvement. While an HSBC report contradicted these numbers.

February 29^th and March 1, 2012 Economic Data forecast v. actual (bold March 1st)

 

Sovereign Bond Auction Schedule

 Mar 01  09:30  Spain  Bono auction

Mar 01  09:50  France  OAT auction

Mar 01  10.30  UK  Auctions 4.0% 2022 conventional Gilt