Forex Analytics from LiteForex of 10.11.10: JPY: Yen gives way before Dollar amid uncertainty in Asia
The Japanese Yen rate goes down in pairing with the USD at the Forex currency market in mid-week which was activated not as much by the external background but mostly by the Asian domestic news.
Forex forecast: MACD indicator is in the positive area for the pair USD/JPY and it goes up, confirming a pair buy signal. Stochastic Oscillator is giving a similar signal today, being in the overbought area.
Forex recommendations: in case of breakdown at the level of 81.90 the pair will go to 82.50 and 82.75.
Weak signals from Asia were plenty today. First, the opinion was expressed that growth in GDP in China will slow down to 9% in QVI or even less and as a whole it will amount to 10.2% per year.
Secondly, Taiwan reported on the possibility of introduction restrictions on the foreign capital, targeted at the “revival” of its own banking sector. China has already mentioned about similar intentions. In principal it will be good if Japan will think about something similar too, because its banking sector is in a difficult situation, while regulators’ efforts are focused on the solution of the deflation problem.
The Bank of Japan maintained interest rate in the target range of 0-0.1% per annum; at the last meeting the Bank of Japan announced the purchase of the mortgage investment trusts with the rating not lower than AA.
It was noted earlier the Bank of Japan expects 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.
Such prospect seems questionable at the moment, considering the latest statistics and taking into account that deflation continues to progress.
Tuesday’s data multidirectional; however negative data prevailed (index of economic observers in October is 40.2 against 41.2 in September, decline continues for the third consecutive month, bank lending is -2.0 y/y in October, the decrease continues for the eleventh consecutive month.
