USD/JPY Fundamental Analysis May 25, 2012, Forecast

Analysis and Recommendation: (close of Asian session)

The USD/JPY is trading at the end of the Asian session at 79.48

As risk aversion remains the call of the markets, investors are ignoring fundamentals and continue to move to safe havens, shedding anything associated with the EU. After the collapse of talks in the EU and the obvious divide between Germany and France, inaction seems to be the only action that the EU can manage. Yesterday’s meeting has now set the future tone for the Hollande Merkel relationship.

The BoJ has decided to move in its own direction, ignoring political pressure and the downgrades from Fitch and Moody’s and at present held key rates and held monetary policy.

The high value of the yen in the current market cycle will have long term economic effects on Japan, as the price of the yen is hurting exports and increasing imports, which throws trade balance and incomes out of line.

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.

Economic Data for May 23-24 actual v. forecast

GBP	Retail Sales (MoM)	-2.3%	-0.8%	2.0%
GBP	Retail Sales (YoY)	-1.1%	1.0%	3.1%
EUR	Industrial New Orders (MoM)	1.8%	-0.1%	-1.2%
GBP	CBI Industrial Trends Orders	-17	-10	-8
CAD	Core Retail Sales (MoM)	0.1%	1.0%	0.4%
CAD	Leading Indicators (MoM)	0.3%	0.3%	0.3%
CAD	Retail Sales (MoM)	0.4%	0.4%	-0.2%
USD	New Home Sales	343K	335K	332K
NZD	Trade Balance	355M	500M	186M
May 24	CNY	Chinese HSBC Manufacturing PMI	48.70	49.30