USD/JPY Fundamental Forecast – January 28, 2016

Analysis and Recommendation:

The USD/JPY is trading at 118.09 falling 33 points as the yen gained but remained in the middle of its recent trading range. Yesterday’s market was a bit hectic with oil prices falling and then reversing course. The Dollar Index ended a two-day drop, with the Fed set to release its first policy statement since it raised interest rates from near zero last month. Officials have indicated that they expect four hikes in 2016. The greenback lost ground Tuesday against the currencies of commodity producing nations including Canada and South Africa as prices climbed for crude oil, metals and agricultural commodities. Australia’s dollar climbed after data showed quarterly inflation was stronger than economists had estimated for the final three months of 2015.

The dollar weakened slightly versus the yen in early Tokyo trading after a gain overnight triggered by oil prices and U.S. stocks rebounding, on hopes oil producers would cut output to address the oversupply in the global oil market, dealers said. Toru Moritani, chief market economist at Sumitomo Mitsui Banking Corp. said the U.S. currency kept to the sidelines partly as market players are waiting for more clues to whether the Fed will help stabilize markets.

“If the Fed sounds too dovish a chord, they’ll lose the option to raise rates in March,” said Masato Yanagiya, head of foreign-exchange and money trading at Sumitomo Mitsui Banking Corp. in New York. “If the Fed isn’t so dovish, it’s likely U.S. yields will rise, and the dollar will strengthen.”

On Tuesday, the dollar gained ground against the yen reflecting a sharp rise in U.S. shares, but its upside remained heavy at the mid-118-yen level ahead of the outcome of the Federal Reserve’s policy meeting later today.

FxEmpire provides in-depth analysis for each asset 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, which covers the current week and are published by Sunday before the new week begins. Daily we share any new events, forecasts or analysis that affect the current day. To achieve a full accurate understanding it is important that you study all of our data and analysis as a whole.

Today’s economic releases:

 

Upcoming Economic Events that you should be monitoring:

Thursday, January 28, 2016

Government Bond Auctions

Date Time and Country

Jan 26 11:10 Italy Holds CTZ/linker bond auction

Jan 26 n/a US Holds 2-year note auction

Jan 27 11:05 Norway Holds bond auction

Jan 27 11:30 Germany EUR 1bn 2.5% Aug 2046 Bund

Jan 27 17:20 Sweden Details of bond auction on 03 Feb

Jan 27 n/a US Holds 2-year FRN auction

Jan 27 n/a US Holds 5-year note auction

Jan 28 11:03 Sweden Holds I/L bond auction

Jan 28 11:10 Italy Holds BTP/CCTeus auction

Jan 28 n/a US Holds 7-year note auction

Feb 02 n/a UK Details of Gilt auctions on Feb 09 & 11