JPY: Japanese Yen continues to rise in price as “protective currency”

At the Forex currency market the Japanese Yen rate is traded upward on Monday morning, investors escape from risk due to the fears that debt crisis can continue in the countries of Eurozone.

Forex forecast: MACD indicator is in the positive area for the pair USD/JPY, however it is moving along the signal line, not giving a clear signal. Stochastic Oscillator remains in the oversold zone today, giving a sell signal for the pair USD/JPY.

Forex recommendations: in case of breakdown at the level of 82.80 bears’ positions will intensify in the pair and traders’ targets will be the levels of 82.65 ? 82.50.

Difficult situation in the NPP “Fukusima-1” is still putting pressure on the Yen; nevertheless today’s investors’ withdrawal from risk and shifting to safe assets today, including JPY, helps to strengthen the position of the Yen.

Starting from today Japanese Ministry of Finance will begin to repurchase government bonds from the market in the amount of  Y160 billion. Japanese Finance Minister Mr. Yosano noted yesterday that economic recession after the earthquake is temporary and by the end of the year the situation can improve in the Country of the Rising Sun. According to Yosano the main factor of uncertainty is instability of power supply and its possible shortage.

Statistics showed previously 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.

Statistics released earlier was positive (unemployment rate amounted to 4.6% in February, unrevised; balance of current account increased by 3.0% y/y in February against the fall by 47.6% in January; level of import increased by 3.3% y/y, export rose by 4.1% y/y).

 

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