By FXEmpire.com
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Introduction: This is one of the most popular crosses. The primary reason why EUR/JPY has rallied 11 percent over the past 3.5 months is because of US growth – not many people realize that the price action of EUR/JPY is directly correlated with how the US economy is doing.
According to studies, there is a strong correlation between manufacturing ISM and EUR/JPY. When manufacturing ISM had a meaningful dip below the 50 boom / bust level. This has happened more than 7 times over the past 20 years. Each time the US manufacturing sector contracted, EUR/JPY rallied. On average, from the month that ISM contracted to the month that ISM moved back above 50, EUR/JPY rallied 314 pips.
Weekly Analysis and Recommendations:
The EUR/JPY closed the week at 101.11 adding 0.44 this session. The pair had been falling all week on the weakness of the euro and the risk aversion themes of the market. On Friday the euro was able to gain some steam on positive news from the ECB, and the EU.
The ECB decided to reduce its collateral requirements for banks, thus helping with liquidity. And Italy, France and Spain announced that they would push a new growth plan for the EU and a fund of 130billion euros to help foster growth.
The fundamentals calendar is fairly lightly populated and focused upon German CPI and unemployment, Eurozone CPI, EC economic and industrial
confidence, and UK and French GDP revisions. Italy auctions bonds on the heels of Spain’s successful auctions but in advance of the critical EU Summit which may put the auctions at greater risk of pre-Summit comments and volatility. The EuroFin Summit will be the main event for this pair.The Japanese yen fell against the euro as well as the USD, as investors are weary about the upcoming BoJ meeting and additional easing.
Japan issues its major monthly economic releases. Japanese industrial production is expected to post the sharpest month-over-month decline in over a year while the highest frequency inflation gauges for Tokyo are expected to post ongoing deflation in both headline and core prices excluding food and energy. Retail sales, total household spending, housing starts, and the jobless rate will round out the broad picture for the Japanese economy.
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 of June 19-23, 2012 actual v. forecast
Date
Time
Currency
Importance
Event
Actual
Forecast
Previous
Jun. 19
02:30
AUD
Monetary Policy Meeting Minutes
10:00
EUR
German ZEW Economic Sentiment
-16.9
4.0
10.8
Jun. 20
09:30
GBP
Claimant Count Change
8.1K
-3.0K
-12.8K
17:30
USD
Interest Rate Decision
0.25%
0.25%
0.25%
19:15
USD
Fed Chairman Bernanke Speaks
23:45
NZD
GDP (QoQ)
1.1%
0.5%
0.4%
Jun. 21
09:30
GBP
Retail Sales (MoM)
1.4%
1.2%
-2.4%
13:30
Core Retail Sales (MoM)
-0.3%
0.2%
0.3%
13:30
USD
Initial Jobless Claims
387K
380K
389K
15:00
USD
Existing Home Sales
4.55M
4.57M
4.62M
Jun. 22
09:00
EUR
German Ifo Business Climate Index
105.3
105.9
106.9
13:30
CAD
Core CPI (MoM)
0.2%
0.3%
0.4%
Historical:
Highest: 156.83 JPY on Sep 22, 2008
Average: 118.28 JPY over this period.
Lowest: 95.61JPY on Jun 01, 2012
Economic Highlights of the coming week that affect the AUD, JPY, NZD and USD
Date
Time
Currency
Event
Previous
Jun 25
14:00
USD
New Home Sales
343K
Jun 26
13:00
USD
S&P/CS Composite-20 HPI y/y
-2.6%
14:00
USD
CB Consumer Confidence
64.9
22:45
NZD
Trade Balance
355M
Jun 27
12:30
USD
Durable Goods Orders m/m
0.2%
14:00
USD
Pending Home Sales m/m
-5.5%
14:30
USD
Crude Oil Inventories
23:50
JPY
Retail Sales y/y
5.8%
Click here a current EUR/JPY Chart.
Originally posted here
