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Barry Norman
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USD/JPY Fundamental Analysis October 15, 2014 Forecast
Analysis and Recommendation:

The USD/JPY soared 41 points to 107.25 as the dollar recovered and the JPY continued to ease after the release of CGPI which missed on an annual basis and met poor expectations on a monthly view. The U.S. currency has weakened this month as Federal Reserve officials said a worldwide economic slowdown may delay U.S. interest-rate increases and weigh on the dollar.

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“Even though the dollar fell in reaction to bad news after a strong rally, medium to long-term buying interest around 107-106 is said to be very strong,” said Kengo Suzuki, chief currency strategist at Mizuho Securities Co. in Tokyo. “While fresh concerns over a global slowdown have emerged, the U.S. is still a step ahead of Japan in terms of its economic recovery.”

The dollar strengthened from a one-month low against the yen on speculation its longest losing streak since July was unwarranted given U.S. economic growth is likely to outpace Japan’s.

The yen fell against all of its 16 major counterparts as U.S. stock futures rallied, damping demand for Japan’s haven assets. The dollar rebounded modestly against the yen and euro on Tuesday following steep falls overnight, although risk aversion amid the fall in global equities and uncertainty on the timing of Federal Reserve interest rate hikes put a firm cap on the currency.

The dollar crawled up 0.4 percent to 107.235, but remained in close range of a one-month low of 106.76 hit earlier in the session.

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.

Today’s economic releases actual vs. forecast:

 

Cur.

 

Event

Actual

Forecast

Previous

 

  JPY

 

CGPI (YoY) (Sep)

3.5%

3.6%

3.9%

 

 

  JPY

 

CGPI (MoM) (Sep)

-0.1%

-0.1%

-0.2%

 

 

  JPY

 

M2 Money Stock (YoY)

3.0%

2.9%

3.0%

 

 

  AUD

 

NAB Bus. Confidence

5

 

7

 

 

  AUD

 

NAB Business Survey

1

 

4

 

 

  NZD

 

RBNZ Offshore Holdings

63.70%

 

65.00%

 

 

Upcoming Economic Events that you should be monitoring:

 

Cur.

 

Event

Actual

Forecast

Previous

Wednesday, October 15

 

  CNY

 

CPI (YoY) (Sep)

 

1.7%

2.0%

 

 

  EUR

 

ECB President Draghi

 

 

 

 

 

  GBP

 

Claimant Count Change

 

-35.0K

-37.2K

 

 

  USD

 

Core Retail Sales (MoM)

 

0.3%

0.3%

 

 

  USD

 

PPI (MoM) (Sep)

 

0.1%

0.0%

 

 

  USD

 

Retail Sales (MoM)

 

-0.1%

0.6%

 

 

  EUR

 

ECB President Draghi  

 

 

   

Government Bond Auction

Date Time Country Auction

Oct 14 08:30 Spain 6 & 12M T-bill auction

Oct 14 09:30 Belgium 3 & 12M T-bill auction (Jan & Oct 2015)

Oct 15 09:03 Sweden Bond auction

Oct 15 09:30 Germany Eur 4.0bn Sep 2016 Schatz auction

Oct 16 08:30 Spain Bono/Obligacion auction

Oct 16 09:30 UK Auctions 0.125% 2024 I/L Gilt

Oct 16 15:00 US Announces details of 30Y TIPS auction on Oct 23

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