Forex analytics of LiteForex of 29.10.2010: JPY: Yen rises intensifying already severe economic situation in Japan

On Friday in the currency market (forex) JPY strengthens in pair with USD.

Forex (forex) Forecast: MACD indicator is in the negative area for the pair USD / JPY and it decreases which confirms previous signal to sell the pair. The signal of stochastic oscillator is the same today being in the oversold area.

Forex (forex) recommendation: if the current market mood remains the same the targets of sellers will be 80.35 and 79.75.

Today the following data has been published in Japan:
- the volume of industrial production fell by 1.9% q / q in the III quarter against the growth by 1.5% in the II quarter;
- the unemployment rate in Japan dropped to 5.0% in September from the level of 5.1% in August;
- Net national CPI fell by 1.1% y/y in September against -1.0% in August;
- Real household spending remained unchanged in September against +1.7% in August.

Thus the deflationary spiral in the Japanese economy continues to twist in spite of all measures taken by local authorities.

The Bank of Japan decided earlier 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.

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