USDJPY WEEKLY OUTLOOK; OVER +500PIPS PROFIT FORECAST

FUNDAMENTAL BEAM

USD/JPY had an uneventful week, as the pair posted modest losses. USD/JPY closed the week at 97.40. This week’s highlight is the Bank of Japan’s Monetary Policy Statement. Here is an outlook on the major market-movers and an updated technical analysis for USD/JPY.

The US dollar was broadly weaker last week , as initial optimism over the debt deal quickly faded . The agreement reached in Congress is only for a few months, as the underlying budgetary issues are yet to be resolved.

A summary of events during the week

1. Household Spending: Monday, 23:30. Household Spending continues to look weak, and the August release posted a disappointing decline of 1.6%. This was well off the estimate of a 0.2%. The markets are expecting a strong turnaround in the upcoming release, with an estimate of 0.7%. Will the indicator bounce back this month as predicted?  
2. Retail Sales: Monday, 23:50. Retail Sales is considered the most important consumer spending indicator, and should be treated as market-mover. The indicator posted a strong gain of 1.1% in August, matching the forecast. The September estimate stands at 1.9%, which would be the best level we’ve seen in over a year. 
3. Preliminary Industrial Production: Tuesday, 23:50. This important manufacturing indicator has been inconsistent, and declined by 0.7% in August. The estimate stood at -0.2%. The markets are anticipating a much better release this time around, with an estimate of a 1.8% gain.
4. Manufacturing PMI: Wednesday, 23:15. This index continues to trade above the 50-point level, indicative of ongoing expansion in the manufacturing sector. No significant change is expected in the September release.
5. Average Cash Earnings: Thursday, 1:30. The indicator is closely related to consumer spending, a critical component of economic growth. In August, the indicator posted a decline of -0.6%, its first drop since April. The markets are anticipating a second straight decline, with the estimate standing at -0.5%.
6. BOJ Monetary Policy Statement: Thursday, Tentative.  The BOJ is not expected to make any changes to current interest rate or monetary base levels. The statement will be followed by a press conference.
7. Housing Starts: Thursday, 5:00. In August, Housing Starts posted a gain of 8.8%, a four-month low. This was well below the estimate of a 12.9% gain. The markets are expecting much better news in September, with an estimate of 12.6%. 
8. BOJ Outlook Report: Thursday, 6:00. This report details the Bank’s view of economic conditions and inflation, and analysts will be combing through it for any clues as to the BOJ’s future monetary policy.

TEHNICAL BEAM

        The Greenback is resuming a strong momentum on the daily timeframe after dropping to a  low of 96.95 thereby hitting a technical support at 97.10  on completion of a corrective wave leg III. This events would therefore enable us conclude the future market behavior for USDJPY by saying; buyers are now sentimentally having a reason to buy this pair.

        If the technical support at 97.10 holds hence, we expect USDJPY reach for a high of 103.56 with a target of well over +500pips in profit.