USD/JPY Fundamental Forecast – May 10, 2016

The USD/JPY added 20 points as the greenback recovered some of Friday’s losses and the yen eased across the board. Traders are paying close attention to the Bank of Japan report this morning as well as comments from Governor Kudora. The pair is trading at 107.32. The yen, which jumped after the Bank of Japan opted to stand pat on monetary policy last week, had some of its gains trimmed after Japanese officials said they could act if needed to halt its rise. Investors, however, remain skeptical whether an intervention by Japan would have any lasting effect.

“Japan’s gonna do more QE, so being short the yen’s a no-brainer. Brexit is a serious risk, so being short the pound is a no-brainer. Where are all those trades today? All those things have been wrong, or tested very severely.”

Currency managers are now in danger of missing out again as sentiment starts to turn. The dollar index climbed 1.5 percent last week as talk of a June rate increase re-emerged. Yet speculators extended net-short positions on the greenback versus eight major currencies to the most since April 2014 in the week ended May 3, CFTC data show.

After trimming bets that the U.S. currency would climb against the euro and yen, Goldman Sachs Asset Management is now wagering on declines in Asian currencies including South Korea’s won, Taiwan’s dollar and Malaysia’s ringgit amid a slowdown in China. (Bloomberg)

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.

Upcoming Economic Events that you should be monitoring:

Tuesday, May 10, 2016

Government Bond Auctions

Date Time       Country           Auction

May 09 17:20 Italy Announces details of bond auction

May 09 N/A Ireland Details of bond auction on May 12

May 10 11:30 Germany Holds I/L bond auction

May 11 11:03 Sweden Holds bond auction

May 11 11:30 Germany Eur 5bn Jun 2018 Schatz

May 12 11:10 Italy Holds bond auction

May 12 17:20 Sweden Details of I/L auction on May 19

May 12 N/A Ireland Holds bond auction