The USD/JPY pair soared last week to its highest level in three months, after the Bank of Japan intervened in the FX market for the third time this year, trying to prevent the yen from further gains against the dollar, which is hurting the Japanese economy.
The BOJ explained that the recent increase in the Japanese currency was due to speculative moves, but the last intervention pushed the dollar up to cover all its previous losses against the yen.
On the other hand, the Japanese officials indicated that the door is still open for more intervention until the currency reflects the real economic situation. While other major currencies used this current weakness in the yen to record more gains against the currency.
Additionally, The FOMC members decided to leave the Operation Twist program unchanged; after they kept the interest rate unchanged between 0.0% and 0.25%, in addition to revise growth projections lower due to the downside risks for the economic outlook amid the current European debt crisis.
The current question in the financial market is whether the yen will return to gain again against the dollar or the last intervention from BOJ is enough to keep the currency weak
The answer for this question will depend on the dollar and the investors’ confidence in financial markets and their appetite for risk, while the Japanese fundamentals will not be a part of the equation, as the yen used to ignore reflecting the Japanese economic performance.
Major highlights for this week that will affect the USD/JPY pair’s trading:
Monday November 07:
On Monday at 04:00 GMT, Japan will issue the Coincident Index for September, where the preliminary reading is expected to come at 92.8 from the previous reading of 107.6.
The U.S. economy will release the Consumer Credit for September at 19:00 GMT, where it’s expected to come at $5.00 billion from the previous reading of -$9.501 billion.
Tuesday November 08:
Both economies will not release any data on Thursday, where the pair’s movements will depend on the market sentiment.
Wednesday November 09:
On Wednesday at 23:50 GMT (Tuesday) Japan will issue the Current Account Total for September, where it’s expected to show a surplus of 1330.5 billion yen from the previous surplus of 407.5 billion yen.
The Adjusted Current Account Total for September is expected to show a surplus of 941.0 billion yen from the previous surplus of 652.6 billion yen, while the Trade Balance for September is expected to show a surplus of 327.1 billion yen from the previous deficit of 694.7 billion yen.
At 04:00 GMT, the Japanese economy will release the Eco Watchers Survey: Current for October, where the previous reading was 45.3, as for the Eco Watchers Survey: Outlook, it has a prior reading of 46.4.
The U.S. economy will release the Wholesale Inventories for September at 14:00 GMT, where the prior reading was 0.4% and it’s expected to come at 0.6%.
Thursday November 10:
On Thursday at 23:50 GMT (Wednesday), Japan will issue Machine Orders for September, where it had a prior reading of 11.0% and expected to come at -6.9%, while the annual reading is expected to come at 11.4% from the previous reading of 2.1%.
At 12:30 GMT, the U.S. economy will release the Import Price Index for October, which had a previous reading of 0.3% and it’s expected to come at 0.3%, on the other hand the annual Import Price Index had a prior reading of 13.4%.
Trade Balance for September will be released at the same time, where the previous deficit was $ 45.6 billion and expected to widen to $46.0 billion.
At 12:30 GMT, the U.S. economy will release its weekly initial claims numbers, where the number of people filing for first-time claims for the state unemployment insurance dropped to 397 thousand last week.
Friday November 11:
On Friday at 23:50 GMT (Thursday), Japan will release the Tertiary Industry Index for September, which had a previous reading of -0.2% and it’s expected to come at -0.6%.
At 13:55 GMT, the U.S. economy will issue the University of Michigan Confidence for November, where it’s expected to come at 61.0 from the previous 60.9.
