Analysis and Recommendation (USD/JPY Forecast For 8 June):
The USD/JPY added 11 points to trade at 124.47 as the dollar recovered after Thursday’s dip in unemployment claims as traders eagerly await this afternoons Nonfarm Payroll report. In US economic data, jobless claims fell by 8,000 to 276,000 in the past week. The number of people still receiving benefits after an initial week of aid fell by 30,000 to 2.2 million — the lowest result in 15 years. US non-farm productivity was revised down from -1.9 per cent to -3.1 per cent in the March quarter.
The Federal Reserve botching the timing of the first rate hike, the U.S. dollar getting too strong and the bond market — especially the U.S. 10-year yield — rising too fast is weighing on the global currency markets. The Fed’s efforts to keep interest rates at historic lows in order to boost economic growth may be backfiring.
“We know central banks want to be supportive of markets and confidence, but this has its risks now especially in the U.S.,” the report cautions.
The current rally is the third-longest without a correction. The mid-1990s had an even longer stretch of seven years before there was a 10% correction. The International Monetary Fund wants the Federal Reserve to wait until 2016 before it raises its interest rates off their historic lows. The U.S. economy isn’t healthy enough to act before that, the IMF concludes.
That goes against what Fed Chair Janet Yellen said just two weeks ago during a speech in Rhode Island. Yellen sees signs of a recovery and believes the Fed will be able to raise rates sometime this year. Most experts believe the Fed will raise rates in September, but the IMF recommendation will likely re-open the debate.
New BoJ member Harada is closely allied with fellow monetary-expansion advocates whose influence surged when Prime Minister Shinzo Abe took office in December 2012. After blaming poor BOJ policy before Kuroda for contributing to Japan’s decades of stagnation, in 2013 he co-edited a book on reflationary measures to revive the economy along with Kikuo Iwata, a current BOJ deputy governor who advocated doubling the monetary base, and Abe adviser Koichi Hamada.
Harada succeeded a board member who in October voted with Kuroda to boost unprecedented monetary stimulus.
ForexTraq provides in-depth analysis for each currency and commodity we review in trading forex. 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 for USD/JPY in our weekly reports.
Today’s economic releases actual vs. forecast:
It is a light data day until the US NFP – There was no top tier data in Asia
|EUR||German Factory Orders (MoM)||0.5%||0.9%|
|EUR||GDP (QoQ) (Q1)||0.4%||0.4%|
|EUR||GDP (YoY) (Q1)||1.0%||1.0%|
|USD||Average Hourly Earnings (MoM)||0.2%||0.1%|
|USD||Nonfarm Payrolls (May)||225K||223K|
|USD||Participation Rate (May)||62.8%|
|USD||Private Nonfarm Payrolls (May)||220K||213K|
|USD||Unemployment Rate (May)||5.4%||5.4%|
Upcoming Economic Events that you should be monitoring for USD/JPY in trading forex:
Monday, June 08, 2015
|Australia – Queen’s Birthday|
|JPY||Current Account n.s.a. (Apr)||2.795T|
|JPY||GDP (QoQ) (Q1)||0.6%|
|JPY||GDP (YoY) (Q1)||2.4%|
|CNY||Exports (YoY) (May)||-5.0%||-6.4%|
|CNY||Imports (YoY) (May)||-10.7%||-16.2%|
|CNY||Trade Balance (May)||44.95B||34.13B|
|EUR||German Industrial Production||0.6%||-0.5%|
|EUR||German Trade Balance (Apr)||19.0B||19.3B|
|CAD||Housing Starts (May)||181.8K|
|CAD||Building Permits (MoM) (Apr)||11.6%|
Government Bond Auctions
Date Time Country
Jun 08 12:00 Norway Details bond auction on 10 Jun
Jun 08 17:30 Italy Announces details of BTP/CCTeu on 11 June
Jun 09 11:10 Austria Holds RAGB bond sale
Jun 09 11:30 UK Auctions 0.125% 2024 I/L Gilt
Jun 10 11:15 Norway Holds bond auction
Jun 10 11:30 Germany Eur 5bn Jun 2017 Schatz
Jun 10 16:30 Sweden Details bond auction on 17 June
Jun 11 11:30 Spain Auctions Bonos
Jun 11 11:10 Italy Auctions BTPs/CCTeus
Jun 11 11:10 Sweden Holds inflation-linked bond auction
Jun 11 11:30 UK Auctions 3.5% 2045 Conventional Gilt
Jun 11 17:00 US Announces details of 30-year TIPs sale on 18 Jun
USD/JPY analysis forecast