Forex Analytics from LiteForex of 01.11.10: JPY: Japanese Yen remains at the high; off the market

At the Forex currency market at the beginning of a new week the Japanese Yen rate is at the local high, the USD however bounced up following a few sessions of decline.

Forex forecast: MACD indicator is in the negative area for the pair USD/JPY and it goes down confirming a previous sell signal for the pair. Stochastic Oscillator is giving a pair buy signal being outside the oversold zone.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 80.90 the pair will go to 81.10 and 81.30. If the pair exceeds the level of 80.20, traders’ targets will become the levels of 79.75 and 79.40.

As the data today evidenced average basic salary in Japan increased by 0.1% y/y in September against the previous decline by 0.2% which became the first growth factor over the past 25 months.

It became known on Friday that unemployment rate in September was 5.0% against 5.1% in August which became the only bright spot in Friday’s block of statistics. Other data was too poor: industrial production volume in QIII: -1.9% q/q against +1.5% in QII; net national CPI in September: 1.1% y/y against 1.0% in August; actual household expenditures in September remained unchanged against +1.7% in August. Thus, based on the statistics it can be said that deflation spiral in the Japanese economy continues to twist despite all measures taken by the authorities.

The Bank of Japan believe that Japanese economy will be back on the path of the moderate growth in 2011 while basic inflation average forecast still amounts to 0.4%. Average forecast of the actual GDP level for the next fiscal year is at the level of +2.1% against the forecast of 2.6% in July. The head of the Bank Shirakawa noted that monetary policy easing will be carried more active than before as the economy proceeds along the course of recovery 

Last week the Bank of Japan decided to keep interest rate in the range of 0-0.1%; the decision was unanimous. In the follow up comments the regulator noted that the measures of the Bank will depend directly on price and market situation; the effect of the monetary policy easing will be seen as early as next year when the economy will return to positive indicators.

[More]