USD/JPY Fundamental Forecast – September 19, 2016

The USD/JPY dipped 5 points to trade at 102.03 falling to the lower end of its trading range as traders are sidelined ahead of next week’s big events. There is no action expected with both the BoJ and the FOMC decisions on Wednesday. The US dollar index retreated from the highest this month after Fed Governor Lael Brainard started the week by saying the case for tighter policy “is less compelling.” That speech was followed by a retail sales report that fell short of analysts’ forecasts. A measure of economic data surprises slumped to the lowest since June. The probability of Fed action by year-end is at the lowest in a month, while that for next week’s meeting has fallen to 18 percent.

With so little consensus on what Bank of Japan Governor Haruhiko Kuroda will come up with for the Sept. 21 policy decision, investors are abstaining from any positions in the yen, while JPMorgan says some investors have closed out bets on declines in the dollar versus the yen. Such is the consternation that the options premium on contracts to buy the currency in a month’s time disappeared for the first time since November, before reversing course this week.

Most Japanese businesses see the central bank’s aggressive monetary stimulus as achieving its stated goal of spurring inflation, a Reuters poll found, with firms citing negative fallout from the program more than positive effects.

Desperate to stimulate growth, encourage capital investment and reverse price declines, the Bank of Japan has embraced negative interest rates, bought up massive amounts of bonds and snapped up riskier assets such as exchange-traded funds.

Asked in a monthly Reuters Corporate Survey to assess the impact of 3-1/2 years of super easy money policy by picking two effects from a series of options, only 6 percent of firms said the BOJ had paved a path towards defeating deflation or accelerating inflation – the very aim of its stimulus program.

FxEmpire provides a wide variety of analysis on a daily, weekly and monthly basis ranging from our exceptional technical analysis as well as our in-depth fundamental analysis along with our daily news and market updates. To get the best understanding of each asset it is important to review the short term daily analysis with the longer term monthly reports. To get email notification when each of these are posted please sign up for our daily newsletter.

Upcoming Economic Events that you should be monitoring:

 September 19, 2016

Government Bond Auctions

Date Time Country Auction

Sep 19 11:00 Belgium Holds OLO auction

Sep 20 11:30 UK Jul 2047 Gilt

Sep 21 10:30 Denmark Holds bond auction

Sep 21 11:03 Sweden Holds bond auction

Sep 21 11:30 Germany Eur 4bn 0% Oct 2021 Bobl

Sep 22 17:20 Italy Announces details of bond auction