Euro/JPY Weekly Outlook –February 20-24

The Euro/JPY rose during last week and thus continued its upward trend of the past couple of weeks. Today the Japanese trade balance report came out and showed an increase of 7.8% in the trade balance deficit to reach a high level of ¥612 billion (roughly $7.7 billion; this news may help trade up the Euro/JPY. Also later on today, the EU ministers of finance will discuss whether to approve the second bailout package for Greece. There are those who think there won’t be a decision on this issue. Currently the Euro/JPY is traded up.

Here is a short outlook for the Euro /JPY exchange rate including the main news items and events that may affect its direction for February 20th to 24th:

Forex Market February Update:

The Euro to JPY rose by 0.85% on Friday to 104.53; during February, the EUROS/USD increased by 4.8%.

The chart below presents the development of the Euro to Yen during 2012 (UTD). It shows the upward trend this exchange rate has had during most of February.

Chart Euro to JPY Exchange Rates  20 -24 FebruaryCorrelations among Exchange Rates –February Update

The chart below presents the linear correlation (moving correlation) between the Euro/JPY and the Euro/U.S dollar (daily percent changes) during the last four months (up to February 17th).

The chart demonstrates the strong positive relation between the two exchange rates. The current correlation between the two daily percent changes of these currencies is nearly 0.66 for February. This might suggest the influence (if at all) of the Euro/USD on the direction of the Euro/JPY is still robust.

Correlations Euro to us dollar and EURO JPY 2011-2012 February 20-24

Current Forex Indexes February 20th

Euro /JPY is traded at 104.96 a 0.41% increase as of 09:20*.

Euro to US Dollar is traded at 1.3213 a 0.56% increase as of 09:20*.

(* GMT)

Euro/JPY Related News for the Week

Tuesday China flash Manufacturing PMI: this index will cover 800 companies in 20 industries in China; according to the HSBC Manufacturing PMI report regarding December 2011 the Manufacturing PMI slightly rose and reached 48.8; this index indicates the development in China’s manufacturing sectors;

Wednesday Euro Area Manufacturing PMI: In the last flash report regarding January 2012, the Euro Zone Manufacturing PMI changed direction and reached 50.4 – a move toward the positive for the first time in five months. This report will provide an indicator to the economic development of the Euro zone’s manufacturing sectors; this news, in turn might affect the Euro/USD exchange rate and consequently EURO/JPY;

Thursday All day – G20 Meeting;

Thursday Bank of Australia Governor Stevens Testimony: governor Stevens will testify in the House of Representatives regarding the economic condition and outlook of the Australian economy;

Euro to JPY Weekly Outlook

I speculate the Euro will probably be affected by the development regarding the Greek bailout talks. If there will be a decision to approve the bailout, it could positively affect the Euro and thus help trade up the Euro/JPY.

The developments of the Euro/USD will probably also reflect the changes in the Euro/JPY. Thus if the Euro/USD will keep trading up, it might also suggest the Euro/JPY will also continue its recent upward trend. Finally, the financial reports that will come out during the week (listed above) might also determine the direction of the Euro/JPY. If these EU related reports will show some signs of progress, it could positively affect the direction of the Euro Yen exchange rate.

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