USD/JPY Forecast March 3-7

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USDJPY had a downfall last week after the Japanese economy showed some signs of strength. The household spending improved with a rate of 1.1% and the expected value was 0.5%.  The most pleasant surprises were the industrial production and retail sales with both of them being published above expectations. Another important indicator that didn’t disappoint was Tokyo Core CPI that also came above expectations proving that “Abenomics” is making some progress.

Also, the political turmoil from Ukraine was a factor that led to the appreciation of the yen. In this kind of situations when uncertainty reigns, investors prefer safe haven assets and the Japanese yen is one of them. The US macro indicators were mixed but the markets are seeing only the good part right now as S&P 500 managed to hit a new record level.

Economic Calendar

Capital Spending q/y (6:50 GTM)-Sunday. The indicator measures the change in total value of new capital expenditures made by businesses and it is a leading indicator of economic health. It is forecasted an increase of 5.1%, so it will be interesting to see if the Nippon economy can maintain the level it showed last week.

Monetary Base (6:50 GTM)-Monday. It is the change in total quantity of domestic currency in circulation and current account deposit held at the BOJ. This is a low impact indicator. It is expected for the monetary base to rise with 54.2% this month.

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