USD/JPY Fundamental Analysis February 29, 2012, Forecast

By Roger Baettig | February 28 2012 3:19 AM

Economic Events: (GMT)

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00:00 AUD HIA New Home Sales (MoM) -4.9%

Housing Industry Association (HIA) New Home Sales measures the change in the number of newly constructed homes sold.

00:30 AUD Construction Work Done (QoQ) -0.6% 12.5%

Construction Work Done measures the change in the total value of completed construction projects. It provides an early indication of trends in building and engineering construction activity. The data is an estimate, based on a survey of approximately 80% of the value of both building and engineering work done during the quarter.

00:30 AUD Retail Sales (MoM) 0.3% -0.1%

Retail Sales measure the change in the total value of inflation-adjusted sales at the retail level. It is the foremost indicator of consumer spending, which accounts for the majority of overall economic activity.

13:30 USD GDP Price Index (QoQ) 0.4% 0.4%

13:30 USD GDP (QoQ) 2.8% 2.8%

The GDP Price Index measures the annualized change in the price of all goods and services included in gross domestic product. It are the broadest inflationary indicator.

14:30 USD FOMC Member Fisher Speaks

Federal Reserve Bank of Dallas President and Federal Open Market Committee (FOMC) voting member (2008 and 2011) Richard Fisher is to speak. FOMC members are responsible for setting the benchmark interest rate and their speeches are closely watched for indications on the future possible direction of monetary policy.

14:45 USD Chicago PMI 61.8 60.2

The Chicago Purchasing Managers' Index (PMI) determines the economic health of the manufacturing sector in Chicago region. A reading above 50 indicates expansion of the manufacturing sector; a reading below indicates contraction. The Chicago PMI can be of some help in forecasting the ISM manufacturing PMI.

15:00 USD Fed Chairman Bernanke Testifies

Federal Reserve Chairman Ben Bernanke (February 2006 - January 2014) is to testify on the economic outlook and recent monetary policy actions before the Joint Economic Committee, in Washington DC. The testimony is in two parts; the first is a prepared statement, then the committee conducts a question and answer session. The Q&A portion of the testimony can see heavy market volatility for the duration.

19:00 USD Beige Book

The Federal Reserve's Beige Book is a report on current economic conditions in each of the 12 Federal districts in the U.S. It gives a picture of economic trends and challenges in the U.S. It is released 8 times a year, 2 weeks before each Federal Open Market Committee meeting. The report is used by the FOMC in their decision on short-term interest rates.

23:50 JPY Capital Spending -6.50% -9.80%

Capital Spending measures the change in the overall value of capital investment made by companies. It is a leading indicator of business conditions and economic health. The number measures the change from the reported quarter to the same quarter a year earlier.

USD/JPY

USD/JPY Fundamental Analysis February 29, 2012, Forecast

Analysis and Recommendation: (close of Asian session)

USD/JPY was trading at 80.45, the USD loss some momentum against the Yen, as investors were appreciating the bottom for the Yen and buying in this morning trading session.

The Bank of Japan has said it would allocate JPY10 trillion to an asset-purchasing program and establish inflation goals as a move to weaken the currency. The pair opened the morning trading at 80.61 and have steadily fallen.

Japanese retail sales slowed their growth in January, rising 1.9% from a year earlier compared to December's gain of 2.5%, the Ministry of Economy, Trade and Industry said Tuesday. Large retailers saw their January sales drop a seasonally adjusted 1.0%, widening from the previous month's 0.3% fall.

US Pending home sales climbed 2% in January to the highest level since April 2010, when buyers were taking advantage of a now-expired tax credit. The pending-home-sales index rose to 97.0 from a downwardly revised 95.1 reading in December, the National Association of Realtors reported Monday.

Price cuts by mainland Chinese real-estate developers suggest profits will be under increasing pressure this year, according to Tuesday research published by Credit Suisse, which said the consensus view has been too optimistic on the earnings outlook for the property sector.

Standard & Poor's said late Monday it downgraded the sovereign credit ratings of Greece to selective default, or SD, because collective action clauses recently put into certain debt agreements. S&P had previously had a CC long-term rating and a C short-term rating on Greece.

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