JPY: Japanese Yen is being corrected after three-day growth

At the Forex currency market on Wednesday the Japanese Yen rate is getting weaker on Thursday morning for the first time this week; the Yen has strengthened enough over the last three days to be technically corrected.

Forex forecast: MACD indicator is in the negative area for the pair USD/JPY, and goes up, giving a buy signal; however, volumes are decreasing. Stochastic Oscillator has come into oversold 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 76.90, the pair will go to 77.10 and 77.35. If upward breakdown does not take place, the pair will consolidate at the current levels. Current correction in the pair will slightly reduce risks of a new round of currency intervention from the Bank of Japan.

Economic situation in Japan has not changed significantly this morning.

According to the previous estimates of the Bank of Japan, 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%. Real GDP in Japan decreased by 0.2% on quarterly basis (-1.3% y/y) in Q2. GDP fell less than expected, and Minister of Finance of the Country of the Rising Sun said that next quarter Japan will demonstrate the rise of economy.

Statistics released earlier showed that real revised GDP in Japan fell by 0.5% q/q (-2.1% y/y) in Q2 against the forecast of -0.5% q/q (-2.0% y/y) and previous level of -0.3% q/q. Statistics released yesterday showed that bank lending fell by 0.5% in August against the decline of 0.6% in July. In addition, index of economical observers who monitor current situation fell to 47.3 points in August against the level of 52.6 points in July.

A meeting of G7 last weekend showed that member countries are concerned about the fate of Japan and large countries are willing to participate in consultations; however joint actions are not yet expected.

As it became known yesterday revised industrial production in July increased by 0.4% m/m versus preliminary level of +0.6% m/m; which is quite natural because slump, which is evident in the economy, was caused by slowdown in the global economy.