JPY: Japanese Yen continues to rise in price

Japanese Yen rate continues to grow at the Forex currency market on Friday supported by the massive withdrawal of investors from the USD positions.

Forex forecast: MACD indicator is in the positive area for the pair USD/JPY and goes down, maintaining a pair sell signal. Stochastic Oscillator has come back to the oversold zone today and is giving a similar signal.

 Forex recommendations: in case of breakdown at the level of 81.70 the pair will go to 81.50 and 81.35.

It became known this morning that Japanese government decided not to issue new government bonds aimed at financing supplementary budget which is designated for recovery process after the earthquake and tsunami in March.

In addition, on Friday morning government of the Country of the Rising Sun approved budget in the amount of 4.015 trillion yen designated for the North-East regions of the country which suffered the most losses during the earthquake.

It is also worth noting that Japan considers the possibility to raise taxes to 15% of the sales tax from the current 10%. It became known yesterday that surplus of trade balance amounted to Y196.5 billion in March against the level of Y931.94 billion a year earlier and tertiary index rose by 0.8% m/m in February against the fall by 0.1% in January - Japanese economy had really expanded but it was before the earthquake in March.
At the same time level of export decreased by 2.2% y/y in March, while level of import increased by 11.9% y/y which is logical.

Earlier statistics showed that the revised volume of industrial output in Japan rose by 1.8% m/m in February against the preliminary level of +0.9%. This is a mediate indicator for the Yen because it shows the situation prior to the earthquake in March. Statistics released this week showed that volume of orders for the basic production equipment in Japan reduced by 2.3% m/m in February for the first time in the last three months while a month earlier the index had increased by 4.2%. The indicator gives an idea about the amount of capital investments in production sector for the next 3-6 months. Thus, continuation of companies’ cost reduction threatens to the Japanese economy in addition to the fact that the situation in the business sector has already been very hard after the series of earthquakes and tsunamis.

The situation in Japanese economy remains almost unchanged. On 18 April the Bank of Japan started to repurchase government bonds from the market for the amount of Y160 billion which should support national economy.

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