By FXEmpire.com
Outlook and Recommendation
The USD/JPY closed May at 78.55, the pair traded in a fairly tight range throughout the month as shown below:
Reacting to a rise in risk aversion, flows into yen have been strong, pushing the currency up 2% in the month of May. Traders cut their short positions and added to longs, reducing the net short position to just US$-1.7 billion. Technicals suggest ongoing downside risk; however a drop below 77 in USDJPY will aggravate intervention rhetoric. The near-term suggest a lower USDJPY; however Japanese fundamentals are weak, which should help USDJPY recover back up to 83.00 by year-end.
The Japanese yen (JPY) continues to be perceived as a safe-haven currency in times of synchronized global financial stress. Since mid-March the yen has been appreciating against both the USD and the EUR in the context of deepening tensions in Europe caused by uncertainties regarding currency union sustainability and systemic erosion in the Spanish financial sector. We do foresee that the perceived safety premium will remain in place over the next quarter, yet the risk of decisive outright intervention by the Japanese authorities will escalate later in the year. Therefore, we are adjusting our quarterly view on USD/JPY values to reflect such a global preference in the near term. The Japanese economy, after expanding at a 4.1% y/y rate in the first quarter of the year, will moderate in the coming quarters to close the year at around 2% on the back of reduced exports to both China and the US, withdrawal of post-disaster consumption incentives and lower fiscal stimulus.
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.
Central Bank Name: Bank of Japan
Date of next meeting or last meeting: May 23
Current Rate: 0-0.10 % (- 0.10)
Statement highlights of last meeting: At the Monetary Policy Meeting held today, the Policy Board of the Bank of Japan decided, by a unanimous vote, to set the following guideline for money market operations for the intermeeting period: The Bank of Japan will encourage the uncollateralized overnight call rate to remain at around 0 to 0.1 percent. Overseas economies on the whole still have not emerged from a deceleration phase but U.S. economic conditions have continued to improve moderately and the sluggish European economy has stopped deteriorating. Global financial markets have generally been stable. Japan’s economic activity has shown some signs of picking up, although it has remained more or less flat. Exports have so far remained more or less flat. As for domestic demand, business fixed investment has been on a moderate increasing trend aided by the restoration of disaster-stricken facilities. Private consumption has firmed up due in part to the effects of measures to stimulate demand for automobiles, and housing investment has generally been picking up. Public investment has recently turned to an increase. Reflecting these developments in demand at home and abroad, production has shown some signs of picking up, although it has remained more or less flat.
Historical:
Highest: 108.00 on Sep 19, 2008
Average: 87.08over this period
Lowest: 75.58 on Oct 31, 2011
Economic events for the month of June affecting AUD, JPY, NZD and USD
|
Time |
Cur. |
Event |
Forecast |
Previous |
||||
|
Friday, June 01 |
||||||||
|
12:30 |
USD |
8.1% |
8.1% |
|||||
|
12:30 |
USD |
150K |
115K |
|||||
|
14:00 |
USD |
53.9 |
54.8 |
|||||
|
Tuesday, June 05 |
||||||||
|
04:30 |
AUD |
3.75% |
3.75% |
|||||
|
Wednesday, June 06 |
||||||||
|
01:30 |
AUD |
0.5% |
0.4% |
|||||
|
Thursday, June 07 |
||||||||
|
01:30 |
AUD |
-5.0K |
15.5K |
|||||
|
01:30 |
AUD |
5.1% |
4.9% |
|||||
|
23:50 |
JPY |
1.0% |
||||||
|
Tuesday, June 12 |
||||||||
|
21:00 |
NZD |
2.50% |
||||||
|
Wednesday, June 13 |
||||||||
|
21:00 |
NZD |
2.50% |
2.50% |
|||||
|
Wednesday, June 20 |
||||||||
|
22:45 |
NZD |
0.3% |
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Click here for updated USD/JPY News.
Originally posted here
