JPY: Japanese Yen holds back its movement

The Japanese Yen rate remains in the range of 78.45-79.60 at the Forex currency market in the middle of the week, not planning a shift to either direction.

Forex forecast: MACD indicator is in the negative area for the pair USD/CHF, and is going down, shaping a sell signal; volumes are high. Stochastic Oscillator goes up in the neutral zone, pushing away from oversold zone, and is giving a buy signal.

Forex recommendations: off the market.Feasible event scenario at Forex: in case of breakdown at the level of 79.00, the pair will go 78.80 and 78.50.

If downward breakdown does not take place, the pair will go to 80.00.It became known today that revised index of leading indicators in Japan rose by 3.4 points in May, against preliminary level of +3.6 points; at the same time revised index of coincident indicators increased by 2.7 points in may against preliminary level of +2.4 points.Market was neutral to the news.       

Representative of the Bank of Japan Mr. Yamaguchi said today that high level of the JPY had no effect on the actual state of economy.He also said yesterday that it is necessary to closely track negative impact of the strong Yen; it also seems very important to have control over foreign activities of the companies.

He believes that Japanese economy needs effective strategies and strong Yen helps to reduce import prices and import costs.At the meeting last week, the Bank of Japan decided to leave interest rate unchanged in the target range of 0-0.1% per annum, as expected.Lending program was also left unchanged in the volume of 30 trillion yen.

According to the Bank estimates, real level of GDP will rise by 0.4% in the fiscal year of 2011 (forecast of April had been more optimistic: +0.6%). In the fiscal year of 2012, GDP growth is expected in the volume of 2.9% which would agree with the April forecast. Next year CPI is predicted to be at the level of +0.7%.It is of interest that starting from this June the Bank of Japan is going to raise its estimate for economic growth in the country, as the growth in the production volumes has triggered revival of exports, and, at the same time, private demand is also growing.

As it became known earlier, consumer confidence index in Japan rose to 35.3 points in June against the level of 34.2 points in May. It is a good sign, showing that economy in the Country of the Rising Sun continues its slow but sure recovery. Statistics released earlier showed that bank lending in Japan decreased by 0.6% y/y in June against the forecast of -0.5% y/y.

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