Forex analytics of LiteForex of 28.10.2010: JPY: Yen is rising; the Bank of Japan remains even-handed

On Thursday in the currency market (forex) JPY resumed growth based on investors' hesitancy on the eve of the publication of important statistics on the United States as well as before the Fed meeting next week.

Forex (forex) Forecast: MACD indicator is in the positive area for the pair USD / JPY and it starts rising which gives a signal to sell the pair. The signal of stochastic oscillator is the same being outside the overbought area.

Forex (forex) recommendations: if the level of 81.50 is broken the targets of sellers will be 81.10 and 80.90.

Today the Bank of Japan decided to keep interest rate in the range of 0-0,1%; the decision was unanimous.

The regulator has stressed in the follow-up comments that the measures of the Bank will depend on prices and the market situation; the effect of soft monetary policy can be seen next year when the economy returns to positive indicators.

The Bank of Japan is sure that Japanese economy will come back to the path of moderate growth in 2011 and the averaged forecast for base inflation is 0,4%. The averaged forecast of real GDP for the next fiscal year is at the level of 2.1% against the June forecast of 2.6%.

The head of the Bank Mr. Shirakawa has said that the easing of monetary policy will be more active than previously as the economy is recovering.

According to the text of monthly report of Japanese authorities released earlier the economic situation of Japan is deteriorating - the last time similar assessment was voiced in the summer of 2008. In addition the first time in 2 months the production forecast estimate is reduced - weak global economy does not contribute to the demand for high-tech products produced by Japan.
As it is noted in the report the unemployment situation remains difficult. Levels of unemployment are high and the prospects so far are uncertain. The main factor of downside risks for corporate profits is low levels of exports and industrial production. The increase of JPY exerts a negative impact on economic sentiments.

However the yen is now quite low taking into account the trend of recent days and we can assume that the next bidding for the pair will be steady.

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