USD/JPY Fundamental Analysis November 20, 2012, Forecast

Analysis and Recommendation:

The USD/JPY is trading at 81.19 as the US dollar eased off in morning trade. With BoJ aggressive monetary policy and the upcoming elections, the JPY remains strong due to risk aversion but otherwise is showing economic weakness. The pair are expected to stay close to this level, while the US figures out how to handle the upcoming budget and tax crisis.

Prime Minister Noda has called for new elections on December 16th and has dissolved the lower house of Parliament as required.

Abe, who heads the largest opposition party, also said he would appoint as the central bank’s next governor someone who agrees with his proposed annual inflation target of 2 to 3 percent. BOJ Gov. Masaaki Shirakawa’s term of office is set to expire next April. Shinzo Abe also said he would consider making the Bank of Japan purchase construction bonds directly from the government to tame chronic deflation if his Liberal Democratic Party wins December’s Lower House election and he becomes prime minister.

Forcing the BOJ to buy government bonds has been long considered taboo because the move caused hyperinflation and devastated Japan’s economy immediately after the end of World War II.

The fiscal law prohibits the central bank from underwriting government-issued bonds. Any purchases of construction bonds by the BOJ could be considered tantamount to the bank financing fiscal deficits, and could thus cause interest rates to spike.

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 November 19, 2012 actual v. forecast

 

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

Government Bond Auction

Date Time Country 

Nov 20 09:30 Spain

Nov 20 10:10 Greece 

Nov 20 10:30 UK 

Nov 21 10:30 Germany 

Nov 21 15:10 Sweden 

Nov 21 16:00 US 

Nov 21 18:00 US 

Nov 22 09:30 Spain 

Nov 22 10:10 Sweden 

Nov 23 16:30 Italy