USD/JPY Weekly Fundamental Analysis- November 30 – December 4, 2015 – Forecast

Weekly Analysis and Recommendation:

The USD/JPY closed the week just in the center of its trading range at 122.81 as markets continue to review the ongoing recession in Japan and the lack of success of Prime Minister Abe’s Three Arrow plans.  With its economy officially in recession, deflation on the horizon and the BoJ exhausting every conceivable option to shock the economy back to life, Japan is at a critical moment.

Making matters worse is that, thanks to corporate tax cuts, “Japan Inc.” has hoarded corporate profits, rather than invests or increase wages as PM Abe so naively assumed. This monetary dilemma that Japan finds itself in (debt-deflation-recession) has rendered standard macroeconomic theory, textbook models, and the Phillips curve completely useless.

Now that unconventional monetary policy has already been utilized, the BoJ is swiftly approaching a critical impasse and soon a choice must be made.

Japan’s central banking regimen has been exceptionally proactive and resourceful in its counter-cyclical monetary policy. The Bank of Japan was the first of several central banks to pursue aggressive monetary stimulus and mass timed asset purchasing programs back in the early 2000s. However, like with the Federal Reserve or Bank of London in recent decades, the BoJ has been apt to enact counter-cyclical monetary policy, and then seen their progress unraveled by the very administrations they are trying to assist.

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 recent analysis and information in our weekly reports and we provide daily updates and outlooks.

Major Economic Events for the week:

Upcoming Government Bond Auctions

Date Time Country 

Dec 01 11:30 UK 1.5% 2021 Gilt auction

Dec 02 16:30 Sweden Announces details of Bond on 11 Dec

Dec 03 10:30 Spain Auctions

Dec 03 10:50 France Auctions OATs

Dec 03 11:03 Sweden Holds I/L bond auction

Dec 04 11:03 Sweden Holds I/L bond auction