JPY: Japanese Yen experiences a slight correction

The Japanese Yen rate experiences a slight correction from local lows at the Forex currency market on Thursday. One should note that it is a technical correction.

Forex forecast: MACD indicator is in the positive area for the pair USD/JPY and is rising, giving a pair buy signal. Stochastic Oscillator stays in the overbought zone today, maintaining a similar signal.
 

Forex recommendations: after a technical correction buyers’ targets will be 85.30 and 85.50.

According to BOJ decision released after today’s meeting, the key interest rate was left unchanged at the historical low of 0.0-1% per annum. The regulator stated, that national economy remains under strong downside pressure expected in the meantime. Later a moderate recovery will take place.

As noted by the officials, financial markets are in whole stable whereas a number of regions experiences production cuts and small business weakness.

Besides BOJ announced a new plan of extra financing amounting to Y1 trln.

All central bank’s movements now aim at stabilization lending for companies to be able to use cheap money in the wake of magnitude-9 earthquake. Part of the above mentioned measures was taken by BOJ after the quake of 1995, but in smaller volume terms.

Revised data on Tankan survey was released the day before – as it became known, business confidence of all major companies in Japan after the earthquake on March, 11, increased by 6 points against the increase by 5 points in December. Besides the forecast for June turned out to be at the level of -2 points after the earthquake and tsunami. Before the acts of God the forecast was at +3 points.

Currently it is obvious that aftermath of the earthquake in March will impact on the economy – according to the estimates of the World Bank disasters in Japan in March will reduce GDP of the country in the middle of this year by 0.25%-0.5%; however it is possible that rapid economic growth will follow after that.

According to observers, monetary policy tightening should not be expected until mid-2012, and stimulus programs will not be cut down for the nearest 6 months at least.

 

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