USD/JPY Fundamental Analysis – December 11, 2015 – Forecast

Analysis and Recommendation:

The USD/JPY jumped 20 points as the stronger US dollar weighed on the Japanese currency while lackluster manufacturing data continued to show problems within the economy of the Asian nation. The USDJPY is trading at 1.2164. The recent crude price fall after OPEC decided to keep the production supply higher led investors to shift their money towards safe-haven assets. The Japanese yen, which has traditionally been seen as a safe-haven currency, benefited from this investment shift. The US dollar to Japanese yen pair ended lower by 0.36% at the end of the day. Going forward, the Bank of Japan’s monetary policy meeting next week coupled with the FOMC meeting will be important drivers to the currency pair movement going forward.

Data showed that machine orders in Japan surprisingly advanced 10.7% MoM in October, rising for the second consecutive month and defying investor expectations for a 1.5% decline. During the previous month, machinery orders had registered a 7.5% increase.

The Japanese yen is in for a bumpy ride over the next few years, as all indicators point to depreciation against the U.S. dollar. The yen to USD exchange rate has been on a rollercoaster since the 2008 financial crisis, but long- and short-term fundamentals suggest only one direction for the Japanese currency’s value: down.

Since hitting a bottom of 76.9 in 2011, the yen to USD conversion rate has skyrocketed to 123.33 just days ago. A lot of the momentum was driven by easy money from the Federal Reserve, a slate of policies that deflated the U.S. dollar.

On top of that, the Japanese economy has been a disaster since the early 1990s. After a “lost decade” of growth became two lost decades, we now must confront the possibility that Japan will never truly recover. And the implications for the yen to dollar outlook obviously aren’t good. Moreover, that implosion of the Japanese yen isn’t confined to the abstract future; it is a real and imminent threat to the world economy.

FxEmpire provides in-depth analysis for each asset 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, which covers the current week and are published by Sunday before the new week begins. Daily we share any new events, forecasts or analysis that affect the current day. To achieve a full accurate understanding it is important that you study all of our data and analysis as a whole.

Today’s economic releases:

 

Upcoming Economic Events that you should be monitoring:

Friday, December 11, 2015

Government Bond Auctions

Date Time Country

Dec 10 19:00 US Holds 30-year bond auction

Dec 11 11:10 Italy Auctions BTPs/CCTeus

Dec 15 11:15 Austria Holds RAGB bond sale

Dec 17 10:30 Spain Auctions Bonos/Obligaciones