USD/JPY Fundamental Analysis October 22, 2014 Forecast

Analysis and Recommendation:

The USD/JPY fell 18 points to trade at 106.77 against a weak US dollar as traders continue to evaluate comments from the Bank of Japan and also resignations in Prime Minister Abe’s government. The yen fell after Japan’s benchmark Nikkei-225 stock index surged 4 percent on Monday, taking in upbeat U.S. economic data last week as well as news that Japan’s $1.2 trillion public pension fund would likely raise its allocation to domestic stocks to about 25 percent from 12 percent.

Resignations in Prime Minister Shinzo Abe’s cabinet were, in the short term, overshadowed by these external factors. The dollar held declines from yesterday against a majority of its major peers as traders speculated a slowdown in global growth will delay the timing of a Federal Reserve interest-rate increase.

The Bloomberg Dollar Spot Index, which measures the currency against a basket of 10 counterparts, has weakened 0.8 percent so far this month amid shifting Fed expectations before policy makers next meet Oct. 28-29.

Major currencies traded in tight ranges on Monday with investors facing a vacuum of data and modest price changes in global markets, save for Japan where stocks rallied on possible public pension fund spending, which helped bring down the yen.

After a week of wide currency market gyrations, investors appear to have settled in for a quiet start to the week, unwilling to make fresh bets ahead of Wednesday’s U.S. inflation data and Thursday’s European manufacturing reports.

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:

 

Upcoming Economic Events that you should be monitoring:

Government Bond Auction

Date Time Country Auction

Oct 21 10:30 Spain 3 & 9M T-bill auction

Oct 21 11:00 Finland Maximum Eur 1bn 2.75% Jul 2028 bonds

Oct 21 11:00 Norway Nok 3bn 3% Mar 2024 bonds

Oct 21 11:00 UK GBP 3bn 2.75% Sep 2024 Gilt

Oct 21 12:30 ESM Up to Eur 1bn 6M T-bills (Apr 2015)

Oct 22 11:30 Germany Eur 2.0bn 2.5% Aug 2046 Bund

Oct 23 11:03 Sweden Sek 1bn 0.5% Jun 2017 I/L bond

Oct 23 17:00 US Announces 2/5/7Y Note & 2Y FRN auctions on Oct 28/29/30

Oct 23 17:30 Italy Announces details of BTPei/CTZ auctions on Oct 28

Oct 23 19:00 US USD 7bn 30Y TIPS auction

Oct 24 17:30 Italy Announces details of BOT auction on Oct 29

Oct 27 12:30 Germany Eur 2.0bn new 12M Bubill (Oct 2015) auction

Oct 27 18:30 Italy Announces details of BTP/CCTeu auctions on Oct 30

Oct 27 12:10 Italy BTPei/CTZ auctions

Oct 28 12:10 Italy BOT auction

Oct 28 19:00 US 2Y Note auction

Oct 29 12:03 Sweden Bond auction

Oct 29 12:30 Germany Eur 4.0bn Aug 2024 Bund auction

Oct 29 17:30 US 2Y FRN auction

Oct 29 19:00 US 5Y Note auction

Oct 30 12:10 Italy BTP/CCTeu auctions

Oct 30 19:00 US 7Y Note auction