JPY: Japanese Yen continues to be corrected

The Japanese Yan rate continues to move away slowly from the previous local highs in Wednesday; however it is not excluded that amid new wave of riots in the Middle East the demand in JPY as safe currency will be back again. 

Forex forecast: MACD indicator is in the positive area for the pair USD/JPY and it goes down, approaching the signal line and is ready to cross it from top to bottom, confirming a previous sell signal for the pair. Stochastic Oscillator is coming out of the oversold zone today and is forming a pair buy signal.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 82.25 the pair will go to 82.50 and 82.80. If the level of 81.80 is broken down, traders’ targets will be the levels of 81.50 and 81.30.

According to the head of the Bank of Japan Mr. Shirakawa the country should keep track of long term consequences which can to some extend affect monetary policy. In addition, the fact that Federal Reserve continues to preserve soft monetary policy has its positive effect on the Japanese economy.

Shirakawa also emphasized that the bank of Japan will promptly respond to inflation risks and if they occur, it will render support to economy.

It became known yesterday that unemployment rate in January remained at the level of  4.9% against 4.9% in December and aggregate employment rate in January demonstrated growth by +170 000 m/m against the revised level of +110 000 in December.

As representative of Japanese government noted yesterday, employment sector in the country continues to recover, however unemployment rate remains static. The head of the Bank of Japan Mr. Shirakawa said in his speech on Tuesday morning that in his opinion current exchange rate of the Yen does not produce additional risks for the economy and business sentiment in the country is stable despite expensive national currency.

Although the levels of industrial production in Japan fell short of expectations (in January: +2.4% m/m (+4.7% y/y) against the forecast of +4.0% m/m), other data has been positive, which proves that the economy has found the way out of recession.

The data released earlier showed deficit of trade balance, which amounted to Y471.4 billion in January against expected level of +Y37.1 billion; although seasonal factor could have been the reason. 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 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 expensive oil.

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