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Weekly Analysis and Recommendation:
The USD/JPY closed the week at 99.36 after breaking above the 100 level. Japanese data was on the positive side all week, but midweek Prime Minister Abe ordered government official’s to develop a stimulus package to support the possible sales tax hike waiting for his signature. On Friday Abe surprised traders and signed the official orders for the tax increase, when markets were not expecting a final decision on Oct 7th. Strong comments during the week from Finance Minister Aso and Bank of Japan Kudora assured traders that the economy could absorb the tax increase. The Olympic committee awarded the 2020 Olympics to Japan which boosted in economic outlook.
The focus this week will be the US FOMC tapering decision. The debate over exactly if, when, and by how much the Federal Reserve will reduce asset purchases oversimplifies the richness of policy options facing the Federal Reserve. Understanding the Fed’s options and their probabilities of enactment is important to managing the post-statement market trade when the statement lands at next Wednesday followed by the press conference. The range of consensus opinions on some of the key tapering variables is captured in the accompanying charts and drawn from the September Reuters survey of primary dealers. This still stands in contrast to far lower expectations for tapering manifest in the survey of National Association of Business Economists. While tapering now and strengthening forward guidance on the length of the pause period for short-term rates could be constructive to Wall Street’s net interest income, it is not clear to us that this would benefit the main street economy. Indeed, we think there are six reasons why tapering at this juncture would be a policy misstep that would be reminiscent of Chairman Bernanke’s past criticisms of the Bank of Japan.
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 daily updates and outlooks.
Major Economic Events for the week of September 9-13 actual v. forecast for Yen, the Aussie, the Kiwi and USD
Tertiary Industry Activity Index (MoM)
Chinese Fixed Asset Investment (YoY)
Chinese Industrial Production (YoY)
BSI Large Manufacturing Conditions
Historical: From 2011 to present
Highest: 103.73 on May 22, 2013
Average: 83.18over this period
Lowest: 75.58 on Oct 31, 2011
Economic Highlights of the coming week that affect the AUD, JPY, NZD and USD
Government Bond Auction
Date Time Country
Sep 16 09:00 Slovakia
Sep 16 09:10 Norway
Sep 17 08:30 Spain
Sep 17 09:30 Belgium
Sep 18 09:10 Sweden
Sep 18 09:30 Germany
Sep 18 09:30 Portugal
Sep 19 08:30 Spain
Sep 19 08:50 France
Sep 19 09:30 UK
Sep 19 09:50 France
Sep 19 15:00 US
Sep 19 17:00 US
Sep 20 15:30 Italy
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