JPY: Japanese Yen concludes this week being in the previous medium- term range

At the Forex currency market the Japanese Yen rate remains within the medium-term range of 76.40-77.75 on Friday, shifting to the upper limit.

Forex forecast: MACD indicator is in the negative area for the pair USD/JPY, and goes up, giving a buy signal. Stochastic Oscillator is moving from the sideways to the gradual fall and started to shape a sell signal.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 77.40, the pair will go to ? 77.60 and 77.75. If upward breakdown does not take place, the target for the pair will still be the level of 77.00.

Statistics released this morning 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. Statistics released yesterday showed that bank lending fell by 0.5% in August against the decline of 0.6% in July. In addition, index of economical observers who monitor current situation fell to 47.3 points in August against the level of 52.6 points in July.

As it became known earlier number of begun housing construction in Japan rose by 21.2% in July against the growth of 5.8% in June. In addition, preliminary volume of industrial output in Japan increased by 0.6% m/m in July against the growth of 3.8% a month earlier. The data was weak, which was to the advantage of the growing Yen, which normally moves in the direction opposite to the markets’ sentiment. The fight against expensive JPY is one of the three objectives of a new Cabinet. It is possible that in the coming weeks, the new government will present a plan to stabilize the JPY.                                    

According to previous estimates of the Bank of Japan, real level of GDP will rise by 0.4% in the fiscal year of 2011 (forecast of April had been more optimistic: +0.6%). In the fiscal year of 2012, GDP growth is expected in the volume of 2.9% which would agree with the April forecast. Next year CPI is predicted to be at the level of +0.7%. Real GDP in Japan decreased by 0.2% on quarterly basis (-1.3% y/y) in Q2. GDP fell less than expected, and Minister of Finance of the Country of the Rising Sun said that next quarter Japan will demonstrate the rise of economy.

At the meeting this week, the Bank of Japan decided to leave interest rate unchanged at 0.1% per annum. Changes in the monetary policy are not planned: program of buying assets and lending program will remain unchanged along with the exchange rate. In the follow-up comments the Central Bank noted that situation in Europe requires thorough attention and Japanese economy maintains the tendency to recover.