By ForexMansion.com
The week ended April 1 has witnessed a significant drop in the JPY against the USD and other major currencies amid expectations that the European central bank and the US federal reserve bank are on their track to withdraw there monetary stimulus from the market, which is a sign of approaching a decision of increasing interest rates.
Expectations of raising interest rates by central banks prompted the investors to buy high yielding currencies and sell the Japanese currency, which has the lowest interest rates among major currencies. In addition to expectations of a quick intervention of the Group of Seven to sell the yen in FOREX markets in case of rapid gains for the Japanese currency.
The USD/JPY pair has hit its highest level in six weeks at 83.73 on Friday April 1, 2011, coming in light of the improved data from the US economy. In addition to the stalemate of the Fukushima nuclear crisis, this started on the 11th of March from the earthquake and followed Tsunami.
Next week will witness the BOJ meeting regarding interest rates, which may witness a new intervention from the Japanese central bank in the financial markets, after pumping 33 trillion yen during March which may result further weakness to the JPY during next week.
Major highlights for this week that will burden the USD/JPY pair’s trading:
Monday 4 April:-
The day will witness almost no economical data from Japan or the US, which will push the pair to move according to the current market sentiment.
Tuesday 5 April:-
The ISM non-manufacturing index will be announce from the US economy at 14:00 GMT which had a previous reading of 59.7, the US data will affect the Pair’s movement due to the absence of Japanese economical data.
Wednesday 6 April:-
At 05:00 GMT the leading index during February will be announced which had a previous reading of 101.5 along with the issuance in the Coincident index with previous reading of 105.9, and at 23:50 GMT the Current account will be announced which had a previous surplus of 461.9 billion yen.
This is along with the absence of US data on Wednesday, where the Current account data will dominant the pair movements incase of a growing trade surplus.
Thursday 7 April:-
The Japanese central bank will announce its Interest rates decision which is expected to be set between the range of 0.0% and 0.10%, and incase of the BOJ’s intervention in the financial market pumping more liquidity, will negatively affect the Yen’s movement pushing it to decline against the dollar.
The US will announce data on the weekly initial Jobless claims, which had a previous reading of 388 thousand applications, and with the presence of any reading improvements the dollar’s movement will witness support against the yen’s where the indicator is a guide of improving conditions in the US employment sector.
Friday 8 April:-
At 05:00 GMT data on the Current eco watchers survey during March will be issued, which had a previous reading of 48.4, along with the issuance of the US housing starts during march at exactly 12:15 GMT which had a previous reading of 181.9 thousand houses, along with the wholesale inventories index during the month of February which had a previous reading of 1.1%.
The US data may affect the pair’s movement in a huge manner due to the lack of important Japanese data. Which may lead the pair to rise incase of improved US data.
Originally posted here
