JPY: Japanese Yen can be corrected at the beginning of the week
The Japanese Yen rate stands still at the Forex currency market and tends to technical correction.
Forex forecast: MACD indicator is in the positive area for the pair USD/JPY and it started to go down slowly, giving a pair sell signal. Stochastic Oscillator remains in the oversold zone today, continuing to give a pair sell signal.
Forex recommendations: considering external background, off the market
Feasible event scenario at Forex: in case of breakdown at the level of 81.90 the pair will go to 82.20 and 82.50. If the level if 81.60 is broken down, traders’ targets will become the levels of 81.40 and 81.25.
The following Japanese data was released today:
– Preliminary level of industrial production in January: +2.4% m/m (+4.7% y/y) against the forecast of +4.0% m/m.
– Retail sales in January:+4.1% m/m (+0.1% y/y) against the forecast of +2.7% ?/?;
– Number of begun construction in January: +2.7% y/y against preliminary value of +7.5%
Although the level of industrial production in Japan did not meet the projections, other data have been positive, which proves that the economy has found the way out of recession.
Deflation in Japan continues to retreat – the data on CPI in January, released today, showed reduction in the rate by 0.2% y/y after the decline by 0.4% y/y in December and the forecast of -0.3%. Food and energy resources begun to rise in price in the Country of the Rising Sun – and these are the main factors of inhibition of deflationary loop.
The data released on Wednesday showed that deficit of trade balance in January amounted to Y471.4 billion against expected level of +Y37.1 billion; although it can be only a seasonal factor. The level of import prices increased by 1.4% y/y in January against expectations of the rise by 7.4%; the level of import increased by 12.4% y/y (forecast: +8.1% y/y). In addition, the deputy head of the Bank of Japan Mr. Yamaguchi stressed this morning that now high rate of national currency neutralizes the factor of high import prices. In addition, he also drew attention to the fact that there is no need to revise forecasts for economic growth with the account of high oil prices.
It is worth noting that index of activity in all sectors of Japan continued to decline in December: by 0.2% m/m against similar reduction level in November. At the same time experts of Nomura Bank reported last week that the worst stage is over for the economy of the Country of the Rising Sun and the process of economic recovery will accelerate. It agrees with the assessment of the Bank of Japan which emphasized that Japanese economy is strong enough now to cope with consequences of temporary recession.
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