USD/JPY Daily Fundamental Analysis for July 05, 2011

The USD/JPY pair started the week with losses due to the volatility in the foreign exchange market, where the dollar continued its weakness against most of its major counterparts.

The Japanese yen was able to start the week with some gains against the dollar and the euro, as the unstable dollar encouraged investors to invest in the low yielding yen in the absence of U.S. markets on Monday on Independence Day celebrations.

On the other hand, the BOJ Governor noted that the central bank will continue the wait and see approach, as most of the central banks across the globe started to withdraw their stimulus packages which could affect negatively the global recovery.

The wait and see policy could force the Japanese yen to stay at current levels against the dollar, where the pair maintained the same levels for nearly the past three months, as investors are waiting any intervention from the BOJ.

On Thursday at 01:30 GMT, Japan will issue the annual labor cash earnings index for May, where the prior reading was down by 1.4% and expected to retreat by 0.5%.

The U.S. economy will release the factory orders for May; expectations refer to 1.0% while the previous reading showed a drop of 1.2%.

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