USD/JPY Fundamental Forecast – May 26, 2016

The USD/JPY traded lower in limited price action, finishing at 109.927, down 0.058 or -0.05%.  The Japanese Yen found support from BoJ Kuroda’s speech in parliament today, where he mentioned issues over exiting the BoJ’s easy monetary policy.

Kuroda’s comments came as a surprise to traders, as for the first time ever he spoke on rolling back the ongoing accommodative monetary policy regime.  Weakness in the Japanese equity market also weighed down on the USD/JPY, with the Nikkei 225 index now up +1.61% versus +1.85 seen earlier.

Today can best be described as a “data lite” day with no major economic releases expected. The calendar suggests the USD/JPY will be largely influenced by a few Fed speakers. Lately, they have been hawkish so if they continue the trend then the U.S. Dollar may rebound against the Japanese Yen later today.

The sideways price action of late suggests that dollar investors are looking for further incentives to challenge recent highs and move yet higher. These fresh incentives could come in the form of more data due later this week, and Japan’s stance on fiscal stimulus, which would in turn boost the Nikkei and improve risk appetite.

The dollar could take its cues over the next few days from data including U.S. initial jobless claims and pending home sales on Thursday and Japanese inflation and U.S. first quarter GDP figures on Friday.

Fed Chair Janet Yellen is also due to speak on Friday, which is also the concluding day for the Ise-Shima G7 Summit being held in Japan.

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, May 26, 2016

Government Bond Auctions

May 25 11:03 Sweden Sek 1bn 3.5% 2022 & Sek 3bn 1% 2026 bonds

May 25 11:05 Norway Holds bond auction

May 25 11:30 Germany Eur 1bn 2.5% Jul 2044 Bund

May 25 19:00 US Holds 5Yr Notes Auction, 2Yr FRN

May 26 11:10 Italy Announces details of bond auction

May 26 11:10 Italy Holds Zero-coupon/BTPei auction

May 26 17:20 Sweden Details of I/L auction on Jun 02

May 26 19:00 US Holds 7Yr Notes Auction

May 30 11:10 Italy Holds bond auction

Jun 01 10:30 Denmark Holds bond auction

Jun 01 11:30 Germany Eur 4bn Apr 2021 Bobl

Jun 01 11:30 UK 1.5% 2021 Gilt

Jun 01 17:20 Sweden Announces details of bond auction on Jun 08

Jun 02 10:30 Spain Holds bond auction

Jun 02 11:03 Sweden Holds I/L bond auction

Jun 02 11:50 France Holds bond auction