EUR-JPY outlook next week april 30- May 4 2012

forex trading outlook today - EUR-JPY prediction next week april 30- May 4 2012 : The Euro was higher against the Japanese Yen on Friday after the release of Japanese data on Retail Sales. EUR/JPY was trading at 107.11, up 0.03% at time of writing. The pair was likely to find support at 106.32, Tuesday’s low, and resistance at 107.78, Monday’s high.

Earlier in the day, official data showed that Japanese retail sales rose more-than-expected to a seasonally adjusted annual rate of 10.3% last month from 3.4% in the preceding month whose figure was revised down from 3.5%. Analysts had expected retail sales to rise at annual rate of 9.8% last month.

BoJ to increase JGB buying by Y10trilloin. Extend duration of JGBs under asset buying to 3 years from 2 years. To increase purchases of trust funds investing in property (J-REITS) under asset buying programme. Size of EFT buying increase to Y1.6trillion from Y1.4t. BoJ decision on asset buying unanimous. BoJ keeps overnight call rate at 0.-0.1%, CPI to gradually rise to range between 0.5 to 1.0%. Friday easing to help Japan's economy to sustainable growth.

MoF Jun Azumi said Japan government is considering possible purchase of S Korean bonds. Need to make full use of deregulation and monetary policy (pressure on BoJ decision today) to beat deflation. Government is likely to start buying S Korean government debt for its FX rerserves

Japan: Industrial output for March +1.0%m/m, vs +2/3% expected. Manufacturers see April output at +1.0%m/m, and -4.1%m/m in May. Japan March industrial output rise at fastest pace since December. Retail sales came in +10.%y/y for March, vs +9.8% expected and 3.5% in February.

- Japan: Household spending for March +3.4%y/y, vs 3.5% exp, -0.1%m/m, vs -0.5% expected. Japan March natiowide core CPI +0.2%y/y, overall +0.5%m/m. Tokyo April CPI -0.5%y/y, vs -0.4% expected, and Tokyo overall -0.3%y/y. Jobless rate for March at 4.5%, in line with expectation. Jobs to applicants ratio at 0.76.

EU: S&P lowered Spain ratings to BBB+/A-2, with negative outlook from A earlier. S&P said budget trajectory likely deteriorated against background of economic contraction and likelihood the government will need to provide further fiscal support for banking sector.

EU: S&P Affirms Ireland Ratings at BBB+/A-2, with negative outlook. S&P said negative outlook on long-term ratings reflects view that there is at least 1 in 3 chance S&P could lower rating in 2012 or 2013. S&P rating could come under pressure if Ireland loses its access to funding from ESM after the referendum on May 31, 2012.

Europe has capacity to handle its debt criss by itself. "Mistake" to think US not contributing to help Europe because it is doing so by providing swap lines. US does not have capacity to save big banks from their mistakes. "Biggest overwhelming risk" to the US economy is divided political system.

JPY Crosses: BOJ kept overnight rate unchanged at 0 - 0.1% and increased the size of asset purchase to JPY10 trillion. The initial erroneous reports of JPY 5trillion triggered large offers on JPY crosses and respective crosses rebounded after the corrected report was out. USD/JPY spiked past 81.40 but tapered off to 81.20 soon after. EUR/JPY came within striking distance of 107.50 but slipped to 107.30. Not left out of the short-lived drama, GBP/JPY also stopped short breaching firm resistance at 131.80 and slipped under 131.40. Elsewhere, AUD/JPY crossed 84.50 but only for a moment before edging towards 84.20. Nikkei was up 1.1%, cheered by the central bank's decision and its weakening effect on the yen.

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