Introduction: In the USD/JPY trade, trying to pick tops or bottoms during that time would have been difficult. However, with the bull trend so dominant, the far easier and smarter trade was to look for technical opportunities to go with the fundamental theme and trade with the market trend rather than to trying tofadeit.
Against the Japanese yen, whose central bank held rates steady at zero, the dollar appreciated 19% from its lowest to highest levels. USD/JPY was in a very strong uptrend throughout the year, but even so, there were plenty of retraces along the way. These pullbacks were perfect opportunities for traders to combine technicals with fundamentals to enter the trade at an opportune moment.
- The interest rate differential between the Bank of Japan(BoJ) and the Federal Reserve
- Japanese government intervention to maintain their currency sends USD/JPY lower
Weekly Analysis and Recommendation:
The USD/JPY ended the week climbing towards the 80 big number. After two months of being stuck in a range close to the 78.50 range the USD was able to gather some momentum to move towards the 80 level. The pair closed the week at 79.33. Two weeks of positive eco data in the US showed definite signs of recovery, while Japan still sees negative reports. With the better eco data, the possibilities of additional Fed QE in the US are reduced helping drive the price. On the other side the Bank of Japan is under instructions to find ways to stimulate the economy by its November meeting.
Date
|
Last
|
Open
|
High
|
Low
|
Change %
|
Oct 19, 2012
|
79.33
|
79.32
|
79.43
|
79.14
|
0.00%
|
Oct 18, 2012
|
79.32
|
79.07
|
79.45
|
78.99
|
0.33%
|
Oct 17, 2012
|
79.06
|
78.86
|
79.14
|
78.62
|
0.26%
|
Oct 16, 2012
|
78.86
|
78.79
|
78.97
|
78.72
|
0.08%
|
Oct 15, 2012
|
78.79
|
78.48
|
78.86
|
78.33
|
0.40%
|
This week is a two-day meeting of the Federal Open Market Committee, which concludes Wednesday. Nomura analysts said considering that QE3 was announced in the September meeting, they now expect the FOMC to enter a holding pattern while watching for signs of a substantial improvement in the labor market. With the FOMC in wait-and-see mode, the ongoing discussion among participants around crafting a consensus forecast is likely to intensify, while other discussion may focus on what to do when Operation Twist ends in December.
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 recent analysis and information in our weekly reports and we provide dailyupdates and outlooks.
Major Economic Events for the week of October 15-19, 2012 actual v. forecast for Yen, the Aussie, the Kiwi and USD
Date
|
Currency
|
Event
|
Actual
|
Forecast
|
Previous
|
Oct. 15
|
AUD
|
Home Loans (MoM)
|
1.8%
|
1.4%
|
-0.7%
|
CNY
|
Chinese CPI (YoY)
|
1.9%
|
1.9%
|
2.0%
| |
CNY
|
Chinese PPI (YoY)
|
-3.6%
|
-3.6%
|
-3.5%
| |
CNY
|
Chinese CPI (MoM)
|
0.3%
|
0.4%
|
0.6%
| |
JPY
|
Industrial Production (MoM)
|
-1.6%
|
-1.3%
|
-1.3%
| |
USD
|
Core Retail Sales (MoM)
|
1.1%
|
0.6%
|
1.0%
| |
USD
|
Retail Sales (MoM)
|
1.1%
|
0.8%
|
1.2%
| |
USD
|
NY Empire State Manufacturing Index
|
-6.2
|
-4.5
|
-10.4
| |
NZD
|
CPI (QoQ)
|
0.3%
|
0.6%
|
0.3%
| |
Oct. 16
|
USD
|
Core CPI (MoM)
|
0.1%
|
0.2%
|
0.1%
|
USD
|
CPI (MoM)
|
0.6%
|
0.5%
|
0.6%
| |
USD
|
CPI (YoY)
|
2.0%
|
1.9%
|
1.7%
| |
USD
|
Core CPI (YoY)
|
2.0%
|
2.0%
|
1.9%
| |
USD
|
TIC Net Long-Term Transactions
|
90.0B
|
45.3B
|
67.2B
| |
USD
|
Industrial Production (MoM)
|
0.4%
|
0.2%
|
-1.4%
| |
Oct. 17
|
USD
|
Building Permits
|
0.894M
|
0.810M
|
0.801M
|
USD
|
Housing Starts
|
0.872M
|
0.770M
|
0.758M
| |
Oct. 18
|
AUD
|
NAB Quarterly Business Confidence
|
-2.00
|
-2.00
| |
CNY
|
Chinese Fixed Asset Investment (YoY)
|
20.5%
|
20.2%
|
20.2%
| |
CNY
|
Chinese GDP (YoY)
|
7.4%
|
7.4%
|
7.6%
| |
CNY
|
Chinese Industrial Production (YoY)
|
9.2%
|
9.0%
|
8.9%
| |
CNY
|
Chinese Retail Sales (YoY)
|
14.2%
|
13.2%
|
13.2%
| |
USD
|
Initial Jobless Claims
|
388K
|
365K
|
342K
| |
USD
|
Continuing Jobless Claims
|
3252K
|
3275K
|
3281K
| |
USD
|
Philadelphia Fed Manufacturing Index
|
5.7
|
1.0
|
-1.9
| |
Oct. 19
|
USD
|
Existing Home Sales
|
4.75M
|
4.75M
|
4.82M
|
Historical: From 2010 to present
Highest:94.99 on May 05, 2010
Average:82.77 over this period
Lowest:75.58 on Oct 31, 2011
Economic Highlights of the coming week that affect the AUD, JPY, NZD and USD
Date
|
Time
|
Currency
|
Event
|
Forecast
|
Previous
|
Oct. 24
|
01:30
|
AUD
|
1.1%
|
0.5%
| |
01:30
|
AUD
|
0.6%
|
0.5%
| ||
02:45
|
CNY
|
47.90
| |||
15:00
|
USD
|
385K
|
373K
| ||
21:00
|
NZD
|
2.50%
|
2.50%
| ||
Oct. 25
|
22:45
|
NZD
|
-825M
|
-789M
| |
Oct. 26
|
00:30
|
JPY
|
-0.5%
|
-0.4%
|
Government Bond Auction
Date Time Country
Oct 22 09:10 Norway
Oct 23 08:30 Spain
Oct 23 14:30 UK
Oct 23 17:00 US
Oct 24 09:10 Sweden
Oct 24 09:30 Germany
Oct 24 14:30 Sweden
Oct 24 15:30 Italy
Oct 24 16:30 US
Oct 25 00:30 Japan
Oct 25 09:10 Sweden
Oct 25 15:30 Italy
Oct 25 17:00 US
Oct 26 09:10 Italy
Click here to read USD/JPY Technical Analysis.
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