JPY: Japanese Yen came down from the clouds to earth

At the Forex currency market the Japanese Yen rate makes successful attempts of correction on Thursday after sharp fall yesterday.

Forex forecast: MACD indicator is in the negative area for the pair USD/JPY, and is going up, giving a buy signal. Stochastic Oscillator reversed sharply in the neutral zone yesterday and directed upward, giving a similar signal.

Forex recommendations: in case of breakdown at the level of 77.20, the pair will go to 77.40 and 77.60. If upward breakdown does not take place, the pair will consolidate at the current levels.

Apparently, the degree of optimism in the market is so high now that demand for the Yen as protective currency is going down. Investors do not need safe harbor, as they expect prompt resolution of problems in Eurozone.

Statistics released today showed that tertiary activity index in Japan fell by 0.2% m/m in August against the decline of 0.3% m/m in July. It became known yesterday that net orders in the machine building sector in Japan increased by 2.1% y/y in August against the growth of 0.4% in July. It is a positive indication; however we shall wait for the data in September to see dynamics of the index. 

In other respects, there are no changes in the Country of the Rising Sun. Statistics released earlier showed that real revised GDP in Japan fell by 0.5% q/q (-2.1% y/y) in Q2 against the forecast of -0.5% q/q (-2.0% y/y) and previous level of -0.3% q/q. The data released at the end of the last week included the following information about inflation: base national CPI amounted to +0.2% y/y in August. In addition, it also became known that unemployment fell to 4.3% in August against the forecast of 4.7% and previous level of 4.7%.

From the fundamental point of view Japanese economy is stable as far as it is possible after the disaster in March. However, the impact of the expensive Yen can provoke resumption of talk about mitigation of fiscal conditions. At a two-day meeting last week the Bank of Japan left interest rate the level of 0.10% per annum, as expected. Regulator has commented that he is going to continue lending program until 30 April 2012. The Bank has refrained additional stimulation of the economy deciding to wait for the more complete results. Volume of assets purchase was maintained at 50 trillion yen.

Tankan business survey published this week, showed that expectations of the large industrial enterprises amounted to +2 points in September against the forecast of +3 points. Expectations of large non-industrial enterprises demonstrated decline of 11 points versus the forecast of -14 points and -21 points previously. Total current account surplus in Japan amounted to Y407.5 billion in August against the forecast of Y462 billion. In addition, consumer confidence index in Japan declined to 38.6 points in September against the forecast of 37.2 points.