By FXEmpire.com

Analysis and Recommendation:

The USD/JPY is trading at 79.62 as the government’s fall over the tax hike bills could have a bearing on the Bank of Japan’s (BOJ) monetary policy and the yen.

The current debate and upcoming vote on the consumption tax is an important one. Increasing the current tax from 5 to 8% in April 2014 and a full doubling to 10% by October 2015 is widely considered one of several measures that Japan must undertake to stabilize its gross debt ratios.

“The BOJ holds further easing hostage to government action on fiscal consolidation, which makes a Noda ouster [yen]-positive,” Condon said.

Noda told a special committee that dissolving the lower house and calling a general election was “not an option,” but he hinted that it could happen after Tuesday’s vote, according to the sources

One of the biggest FX risks to the tax issue is the potential for rising political uncertainty, including the risk of a no-confidence vote. Over the next week, retail sales, CPI and Tankan will provide an important fundamental update. However, the most important medium term drivers for USDJPY remain interest rate spreads and risk aversion.

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 up to the data analysis and information in our weekly reports.

Upcoming Economic Events that affect the AUD, NZD, JPY and USD

Date

Time

Currency

Event

Previous

Jun 27

Jun 28

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%

1:00

NZD

NBNZ Business Confidence

27.1

Jun 29

12:30

USD

Unemployment Claims

12:30

USD

Final GDP q/q

1.9%

22:45

NZD

Building Consents m/m

-7.2%

23:30

JPY

Household Spending y/y

2.6%

23:30

JPY

Tokyo Core CPI y/y

-0.8%

23:50

JPY

Prelim Industrial Production m/m

-0.2%

1:30

AUD

Private Sector Credit m/m

0.4%

12:30

USD

Core PCE Price Index m/m

0.1%

12:30

USD

Personal Spending m/m

0.3%

13:45

USD

Chicago PMI

52.7

13:55

USD

Revised UoM Consumer Sentiment

74.1

Click here to read USD/JPY Technical Analysis.

Originally posted here