ECB and BOE ahead, EUR/JPY Market Driver

Last week’s currency trading review

The EUR/JPY is swinging 200 pipsdaily in a strong uptrend as traders express the Euro strength vs. the crumblingJapanese Yen. With the BOJ set to target a 2% inflation target via bondpurchases and publicly wanting to move the USD/JPY to Y95-100 as a fairer valueof their currency. The G20 meet in two weeks and it is expected that countrieswill express their dismay at the politicization of the Yen strength and thepressure on the BOJ.

The EUR/USD has been in a soliduptrend as the FED remains on hold and the Eurozone emerges alive from its debtcrisis more unified and seemingly a long term bet on the region. The politicalwill invested in the EU and backed up by ECB Governor Draghi’s famous ‘whateverit takes’ comments have reduced what is called ‘tail risk’ in the market. Tail riskis the chance of a dramatic event like Spain/Italy/Greece leaving the EU orslipping into civil chaos with youth unemployment at 50%.

Currency Movement last week

EUR/USD was up +1.41% closingat 1.3643, after opening the week at 1.3451.

USD/JPY was up +2.04% closingat 92.77, after opening at 90.88.

GBP/USD was down -0.62% closingat 1.5696 after opening at 1.5793.

AUD/USD was down -0.16%closing at 1.0407 after opening at 1.0424.

This Week’s Trading Preview

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Forex Economic Data Preview

In the States; On Wednesday, weekly jobless claims forecast at 361kvs. 368k previously. Also Preliminary, NonFarm Productivity forecast at -0.8%vs. 2.9% previously. On Friday, December Trade Balance forecast at -45.8Bn vs.-48.7Bn previously. We will provide our previews and reviews ofthese data releases in the daily summary.

In the Eurozone; On Thursday the EU summit begins and the ECB meetwhere they are likely to keep rates at 0.75%. On Friday, German Trade Balancefor December forecast 0.2% vs. 0.2% previously. In the UK; On Thursday, BOE Future Governor Carney is due to speakbefore the MPC Interest Rate decision where they are widely forecast to hold at0.5% and keep the asset purchase program at 375bn. Â We will provide our previews and reviews of these data releases in the daily summary.

In Japan; On Friday, December Current Account forecast at 0.24T vs.0.23T previously. In Australia; OnThursday, January Employment Change forecast at 5.8k vs. -5.5k previously. The UnemploymentRate is forecast to tick higher to 5.5% vs. 5.4% previously. On Friday, RBA MonetaryPolicy Statement.

By Anthony Darvall (TonyD)