The USD/JPY pair dropped to its lowest level in two weeks, where the Japanese currency is considered the market’s confidence parameter, and since the EU debt crisis is the main event in the financial market nowadays, the yen reflects any developments in the EU crisis.
Standard & Poor’s announced last week that it may cut the credit ratings for France, Germany and other countries from the EU region as they were all placed under review, which powered the Japanese yen to gain momentum against most of its major counterparts as a safe haven due to concerns over the gloomy outlook for the euro area.
On the other hand, EU leaders’ summit in Brussels added to the volatility after they reached an according for a new intergovernmental pact after UK blocked the treaty change and also provided 200 billion euros for the IMF to fight the crisis which still was not major for markets yet also was not a total disappointment and this week the market will continue to react on the measures.
The greenback also returned to profits zone, as the instability in the financial market drove investors to buy the dollar as a safe haven, while the USD/JPY pair declined as a result of a stronger demand for the yen than the dollar.
Expectations for the USD/JPY pair will depend on the current market sentiment, which in roll depend on the developments in the EU debt crisis and the understanding of the results of the Brussels summit.
Major highlights for this week that will affect the USD/JPY pair’s trading:
Monday December 12:
On Monday at 05:00 GMT, the Japanese economy will release the annual Consumer Confidence for November where it’s expected to come at 38.5 from the previous reading of 38.6.
The U.S. economy will release the Monthly Budget Statement for November at 19:00 GMT where the deficit is expected to wider to $150 billion from $98.5 billion.
Tuesday December 13:
On Tuesday at 23:50 GMT (Monday), Japan will release the Tertiary Industry Index for October, where it’s expected to rise 0.4% following the drop of 0.7%.
The United States will release the Advance Retail Sales Index for November at 13:30 GMT where it is expected with 0.6% rise after 0.5%.
The U.S. Business Inventories for October will be released at 15:00 GMT where it’s expected to come at 0.3% from the previous reading of 0.0%.
At 19:15 GMT, the Federal Reserve Bank will announce the Federal Open Market Committee Rate Decision, where the central bank is expected to keep the rate steady near zero.
Wednesday December 14:
On Wednesday at 04:30 GMT, the Japanese economy will release the Industrial Production for October where the previous reading was 2.4%, as for the annual reading it was up by 0.4%.
The Japanese Capacity Utilization will be released at 04:30 GMT, where it had a prior reading of -3.6%.
At 13:30 GMT, the U.S. economy will release the Import Price Index for November where it is expected to rise by 0.9% after 0.3% drop.
Thursday December 15:
On Thursday at 23:50 GMT (Wednesday), Japan will release the Tankan Large Manufacturers Index for the fourth quarter, where it’s expected to drop by 2 from the previous rise of 2, while the Tankan Non-Manufacturing Index is expected to remain steady at 1 the same as the prior reading.
As for the Tankan Large All Industry Capex it is expected to rise by 2.2% from the previous reading of 3.0%.
The U.S. economy will release the Producer Price Index for November at 13:30 GMT where it’s expected to come at 0.2% from the previous reading of -0.3%. The annual Producer Price Index is expected to rise to 6.0% from the previous reading of 5.9%.
The U.S. Current Account Balance for the third quarter will be up at 13:30 GMT and the deficit is expected to narrow to $107.7 billion from the previous deficit of $118.0 billion.
The Empire Manufacturing Index for December will be released at 13:30 GMT where it’s expected to come at 2 from the prior reading of 0.61.
At 13:30 GMT, U.S. economy will issue its weekly initial claims numbers, where the number of people filing for first-time claims for the state unemployment insurance increased 381 thousand last week.
The Net Long-term TIC Flows for October will be up at 14:00 GMT, where the previous reading was $68.6 billion, as for the Total Net TIC Flows it had a previous reading of $57.4 billion.
The U.S. Industrial Production for November will be released at 14:15 GMT, where it’s expected to come at 0.2% from the previous of 0.7%. The Capacity Utilization for November is expected to come at 77.9% from the prior 77.8%.
The Philadelphia Fed index is due at 15:00 GMT for December and expected to rise to 5.0 from 3.6.
Friday December 16:
On Friday, the U.S. economy will release the Consumer Price Index for November at 13:30 GMT, where the prior reading was down by 0.1% and expected to come at 0.1%. As for the annual reading it’s expected to remain steady at 3.5%.
Originally posted here
