JPY: Japanese Yen holds positions near the peak of March

The Japanese Yen rate holds positions near the highs of March at the Forex currency market on Monday morning even though the pair USD/JPY tends to grow today.

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 down in the neutral zone, giving a sell signal and coming close to the oversold zone.

Forex recommendations: in case of breakdown at the level of 78.40, the pair will go to 78.25 and 78.10.

Judging by the dynamics of the last week, it seems that Japanese Yen has restored its previous status of a protective currency. Trade balance in Japan increased to the level of +Y70.7 billion in June against the forecast of -Y149.0 billion; therefore the balance exceeded limits of the two-month downfall of deficit. 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.

Finance Minister of Japan, Mr. Noda noted last week that the Yen is moving only in one direction lately. He believes that stabilization in Greece will encourage improvement of the general situation in the market.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 earlier 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 which was held 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%.Exports in Japan decreased by 1.6% y/y last month against the forecast of decline by 4.1% y/y; imports rose by 9.8% y/y, while expected growth had been 11.0% y/y. 

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