USD/JPY Fundamental Analysis October 3, 2014 Forecast

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Updated: Aug 24, 2015, 22:00 UTC

Analysis and Recommendation: The USD/JPY eased by 10 points as the US dollar lost a bit of momentum to trade at 108.79. A recovery in the world's

USD/JPY Fundamental Analysis October 3, 2014 Forecast

Analysis and Recommendation:

The USD/JPY eased by 10 points as the US dollar lost a bit of momentum to trade at 108.79. A recovery in the world’s third-biggest economy is faltering, despite Abe’s massive monetary easing and government spending over the past 21 months, and Japan may already be sliding into recession just as Abe must decide whether to raise the tax once again. The damage from an April tax hike has been worse than expected and worse than an increase in 1997, which began a tailspin that ended the career of the then prime minister. The economy may already be shrinking. The Bank of Japan’s tankan survey on Wednesday showed that while sentiment has ticked up for big manufacturers thanks to a weaker yen, service companies were markedly less confident, highlighting prolonged weakness in domestic demand..

This followed data on Tuesday showing an unexpected drop in factory output for August and a deeper drop than expected in household spending, the fifth decline in a row.

The dollar-yen reached 110.08 in Asian trading Wednesday and has risen 8 percent since early August, driven by expectations for a Federal Reserve rate hike in the first half of 2015 and weak readings on the Japanese economy. The fresh dollar-yen high prompted Japan’s Deputy Chief Cabinet Secretary, Katsunobu Kato, to call for authorities to monitor yen weakness closely because of its impact on prices.

Concerns that excessive yen weakness could make it difficult for corporations to purchase materials abroad underlie Kato’s call, a departure from recent rhetoric on the yen.

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
AUD	Building Approvals (MoM)	3.0%	1.0%	2.1%
AUD	Trade Balance (Aug)	-0.787B	-0.700B	-1.075B

Remember the ECB Press Conference on Thursday evening

Upcoming Economic Events that you should be monitoring:

Cur.	Event	Actual	Forecast	Previous
GBP	Services PMI (Sep)		59.1	60.5
USD	Nonfarm Payrolls (Sep)		215K	142K
USD	Unemployment Rate		6.1%	6.1%
USD	ISM Non-Mfg. PMI		58.5	59.6