Last week witnessed a significant rise for the Japanese yen against the dollar, as fears returned to financial markets in light of the new earthquakes that hit Japan. On the other hand, the 85.50 level managed to limit gains for the USD/JPY pair and push it down once again.
The new 7.1 quakethat hit Japan caused power outages in Fukushima nuclear reactor, in addition to another 5.8 quake that hit the north of Japan. The quakes increased demand for the Japanese yen, as concerns regarding Japan’s nuclear crisis dominated investors’ decisions.
The Bank of Japan agreed to introduce more support and to intervene in the financial market if needed, as the BOJ is trying to revive the economy from its worst phase after the massive quake that hit Japan on March 11.
Moreover, the International Monetary Fund cut its economic growth forecasts for the U.S. and Japan, where the Japanese government said problems remain at the nuclear plant after the quakes.
Furthermore, Fed Chairman Ben S. Bernanke said last week the acceleration of inflation will be temporary, as the increase in commodity prices is expected to slow.
Some Fed policy makers indicated that rising inflation rate is transitory, which could prevent them from hiking interest rates following ECB. This fact could give the Japanese currency more momentum against greenback.
Major highlights for this week for the USD/JPY trading:
Monday April 18:
The U.S. economy will issue NAHB housing market index for April at 14:00 GMT, and is expected to come at 17 inline with the previous and no much impact on the market. The Japanese economy is not going to issue any news on Monday, which could drive the pair to move in a volatility manner.
Tuesday April 19:
The Japanese economy will start the day at 05:00 GMT and release consumer confidence for March following the previous 40.7 beside the consumer confidence for households after the previous 40.6. Confidence is expected to take a strong hit following the earthquake which might start to be reflected on data from the nation in the coming period.
At 12:30 GMT the U.S. economy will release building permits for March, and expected to come at 540 thousand compare with the previous of 517 thousand. The housing starts for March is also expected with a rise from the previous 479 thousand to 520 thousand which will be a boost for the sentiment and help ease haven demand support the dollar over the yen.
Wednesday April 20:
Japanese will release the merchandise trade balance for March at 23:50 GMT Tuesday night; the previous reading showed a surplus of 654.1 billion yen and is expected to narrow to 568.6 billion yen.
Exports are expected to drop by 1.1% during March from previous increase 9.0%, after Japan witnessed the worst quake in its history during March which halted exports and caused many companies to shutdown factories and stop productions.
The U.S economy is to release existing home sales for March at 14:00 GMT; the reading is expected to come at 5.00 million with 2.5 percent while the previous reading was 4.88 million.
The U.S. housing data is anticipated to show some improvement during March, which could help the greenback to rebound against the Japanese yen.
Thursday April 21:
Japan will start Thursday by issuing the final reading for coincident index during February from the previously reported 106.3, while the final reading for the leading index from the previously reported 104.2. The data will not be of importance as it was prior to the earthquake and the effect now ongoing on the Japanese economy.
At 12:30 GMT the U.S economy will release its weekly initial claims numbers, where the number of people filing for first-time claims for the state unemployment insurance has reached 412 thousand.
The U.S. house price index for February will be issued at 14:00 GMT. The leading indicators index for March is expected to retreat to 0.2% from the previous increase of 0.8%.
Finally, U.S. economy will release Philadelphia Fed Index for April, which expected to slow to 37.0 from the previous 43.4.
Friday April 22:
The week ends on a short note as the market will be out with central banks holiday on Good Friday.
Originally posted here
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