By FX Empire.com

The USD/JPY pair fluctuated last week as the risk appetite returned to markets; however fears and uncertainty regarding the global growth outlook prevented the pair from recording more gains and remained within the same range.

The EU leaders pledged to contain the debt crisis and prevent it from spreading to other countries. The sentiment improved after the announcement which encouraged investors to increase demand for higher-yielding currencies.

On the other hand, the Japanese yen retreated against most of its major counterparts, but it kept its gains against the dollar as the weak greenback opened the way for the yen to control the pair’s movement.

The Fed’s meeting minutes didn’t draw a clear picture for the upcoming phase in the United States, which caused more selling pressures on the dollar against the major currencies especially as it showed some members supported another round of QE which will pressure the dollar.

The BOJ’s minutes showed more downside risks to the Japanese economy, which could announce more monetary easing to support the economy, while the manufacturing sector still is not able to recover from the March 11 quake aftermath.

Expectations still refer to strong yen especially against greenback, as fears of the debt crisis and global economy fuel risk aversion which could end any current optimistic movements in the markets.

Major highlights for this week that will affect the USD/JPY pair’s trading:

Monday October 17:

On Monday at 04:30 GMT, the Japanese economy will start the week with the final August Industrial Production where it was reported with a rise of 0.8%, and by 0.6% on the year.

The U.S. economy will release the Empire Manufacturing survey for October at 12:30 GMT where the index is expected to improve to -4.0 from -8.82.

The Industrial Production for September will be released from the U.S. economy at 13:15 GMT and expected to maintain the same expansionary pace as the previous month of 0.2%. On the other hand, the Capacity Utilization is expected to rise to 77.5% from 77.4%.

Tuesday October 18:

On Tuesday at 12:30 GMT, the U.S. economy will issue the Producer Price Index for September where it’s expected to come at 0.2% from the prior reading of 0.0%, while the annual Producer Price Index is expected to ease to 6.4% from 6.5%.

The U.S. Net Long-term TIC Flows for August will be released at 13:00 GMT, where the previous reading was $9.5 billion, as for Total Net TIC Flows it recorded net selling of $51.8 billion the previous month.

Wednesday October 19:

On Wednesday at 04:30 GMT, the Japanese economy will release the All Industry Activity Index for August, where it had a previous reading of 0.4% and expected to fall to 0.5%.

The U.S. economy will issue the Consumer Price Index for September at 12:30 GMT, where it’s expected to come at 0.3% from the previous reading of 0.4%, as for the annual Consumer Price Index it’s expected to hold at 3.8%.

The U.S. Housing Starts for September will be released as well at 12:30 GMT with and expected to rise to 595 thousand by 3.9% from the previous 571 thousand. The Building Permits on the other hand are expected with a drop by 2.4% to 610 from 620 thousand.

Thursday October 20:

On Thursday at 05:00 GMT, Japan will release the final reading of Coincident Index for August, which had a prior reading of 107.4, while the Leading Index had a previous reading of 103.8.

On Thursday at 12:30 GMT, U.S. economy will issue its weekly initial claims numbers, where the number of people filing for first-time claims for the state unemployment insurance increased 404 thousand last week.

The Leading Indicators for September will released at 14:00 GMT and expected to slow to 0.2% from 0.3%. The Philadelphia Fed index is also due at 14:00 GMT and expected to improve to -9.5 from -17.5.

As for the Existing Home Sales for September it’s expected with a drop of 2.65% to 4.91 million from 5.03 million.

Friday October 21:

Both economies will not release any fundamentals and the pair will be affected by the prevailing economic sentiment.

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