JPY: Japanese Yen is being corrected however remains strong

At the Forex currency market the Japanese Yen rate is being slightly corrected on Thursday after yesterday’s rapid growth.

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 increasing, which indicates purchase of a pair.

Forex recommendations: in case of breakdown at the level of 81.00 the pair will go to 80.80 and 80.60. If downward breakdown does not take place, the pair will consolidate in the current range.

As it became known today, Prime Minister of Japan Naoto Khan is going to resign as soon as reconstruction of the country after the earthquake will gain stability. 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.

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.

 

 

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