JPY: Japanese Yen determines movement direction on Thursday

The Japanese Yen rate is traded close to the starting level of today's session at the Forex currency market on Thursday, trying to determine movement direction.

Forex forecast: MACD indicator is in the positive area for the pair USD/JPY, however it goes down today, giving grounds for a pair sell signal.
Stochastic oscillator is giving a similar signal, being in the neutral zone.

Forex recommendations: traders' targets today will be the levels of 82.75 and 82.30. The last Japanese statistics released this week was not too impressive (index of leading indicators was revised to -0.9 points in September against the previous level of -0.6 points; index of coincident indicators was revised tp -2.3 points m/m in September (previous level: -1.3). In addition activity index in the Japanese service sector reduced by 0.9% m/m in
September against the previous level of -0.2% m/m .

However the fall of the Yan this week at Forex gave local authorities a chance to focus their attention on the daunting problems in economy- in
particular, on deflation. The Bank of Japan maintained interest rate in the target range of 0-0.1% per annum; at the last meeting the Bank of Japan  announced the purchase of the mortgage investment trusts with the rating not lower than AA.

It was noted earlier that in accordance with the Bank of Japan expectations, domestic economy will revert to the moderate growth path in 2011; while
average forecast of basic inflation amounts to 0.4% so far. Average forecast of the real level of GDP for the next fiscal year is at the level of +2.1%
against the forecast of 2.6% in June. The head of the Bank, Mr. Chirakawa noted that they will carry out monetary policy easing more actively than it
was before, as the economy follows the way of development.

The Japanese GDP growth was 2.5% in QIII (in QII the index increased by 1.5%) - this was the economists' average forecast. The data will be released on 15 November, on Monday. However, market believes that after some acceleration in QIII, Japanese economy will slow down by the end of the year, as the high rate of JPY affects exports' levels.

If this forecast comes true, the Bank of Japan will have to take additional measures to support economy.

[More]