JPY: Japanese Yen has shifted to growth again

At the Forex currency market the Japanese Yen rate resumed its growth on Friday morning again due to the pessimistic forecast of the rating agencies regarding the U.S. economy.

Forex forecast: MACD indicator for the pair USD/JPY is in the negative area, increasing moderately, however at the moment it is moving along the signal line and is not giving any signal. Stochastic Oscillator reversed in the neutral zone and is going down, which gives a pair sell signal.

Forex recommendations: in case of breakdown at the level of 81.50 the pair will go to 80.20 and 80.00. If downward breakdown does not take place, the pair will consolidate in the current range.

Important Japanese statistics was not released today, so the Yen responds to the external background where Moody's has warned the USA about possibility of revision the ratings to downward prospects if parties in Congress fail to agree on the public debts levels. The issue of increasing the upper limit is urgent for the USA and there is no much time to resolve the matter.

As it was made public earlier, preliminary volume of retail sales in Japan reduced by 4.8% y/y in April against expectations of fall to -6.0% y/y; In addition, net CPI in Japan rose by 0.1% y/y in May against the increase of 0.2% in April. Japan has confronted with the rise in inflation for the first time over 28 months, which is crucial for the economy; however, it requires confirmation over the next few months. Japanese consumer prices grew by 0.6% y/y excluding food, and prices for utilities and food skyrocketed.

This week, rating agency Moody's Investors Service announced intention to review Aa2 rating of the Japanese government and local bonds to give a negative forecast –the JPY declined in respond.

The head of the Bank of Japan Mr. Shirakawa said in the middle of the week that economy of the country is still under severe pressure and its recovery is expected in the second half of the fiscal year. According to him shortage in supply is decreasing faster than expected; however excessive focus on the level of business activity can lead to risks.

Prime Minister of Japan Naoto Khan is going to resign as soon as reconstruction of the country after the earthquake will gain stability. Some markets have been discussing such possibility for some time already, while political forces demand Khan’s resignation.

Japanese statistics released on Tuesday showed that industrial output in Japan was favourable, however below the forecast. Unemployment rate increased to 4.7%. In addition, household spending continues to demonstrate negative dynamics.

 

 

[More]