JPY: Japanese Yen has suspended its growth once again

At the Forex currency market the Japanese Yen rate weakens again on Thursday after two sessions of growth this week. Medium -term channel for the pair is still uncertain due to ambiguous external factors. Meanwhile, demand for the JPY as a protective currency is minimal.

Forex forecast: MACD indicator for the pair USD/JPY begun to grow in the positive area and is giving a buy signal. Oscillator continues to decline slowly in the neutral zone and is giving a sell signal.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 77.70, the pair will go to 78.10 and 78.30. If upward breakdown does not take place, the pair has a chance to return to 77.40.

Macro-economic situation in Japan has not changed fundamentally this morning.

Statistics released yesterday showed that orders in the construction sector of Japan amounted to +24.3% y/y in October. In addition, preliminary industrial output rose by 2.4% m/m (+0.4% y/y) in October against the forecast of +1.1% m/m. nevertheless not everything is so positive: PMI in the manufacturing industry declined to 49.1 points in November, as per Markit/JMMA estimates, against the level of 50.6 points in October.

Another “fly in the ointment” came from rating agencies: Japanese agency R&I forwarded AAA rating of country for the review with probability of downgrade.

Rating agency S&P said earlier that Japanese rating is going to be revised soon, as financial situation in the country is worsening every day. According to the economists of the Agency it is hardly probable that Japan will be able to avoid debt problems.

The head of the Bank of Japan Mr. Shirakawa noted this week that growth of the JPY continues to negatively impact on the local economy and that current rise of the JPY was caused by the European crisis. He believes that if appropriate measures are not taken straight away, economy of Japan will decline sharply by 2030. Mr. Shirakawa also noted that interventions against Yen are acceptable and effective.

It became known earlier that unemployment rate in Japan increased to 4.5% in October against the level of 4.1% in September, while expectations were at 4.2%. The rate is increasing for the first time in three months, which is an indication of a new round of slowdown in Japanese economy. Large funds have been invested into Japanese economy following the earthquake in March, which explains fairly rapid recovery; however the rate of recovery started to decelerate lately. It should be closely tracked to what extent European economic slump would affect Japanese economy.