JPY: Japanese Yen is growing again at the end of the week

At the Forex currency market the Japanese Yen rate is growing again on Friday morning, after two days of correction in the pair.

Forex forecast: MACD indicator is in the negative area for the pair USD/JPY, and started to grow slightly, giving a buy signal, although it is very weak. Stochastic Oscillator goes up in the neutral zone, approaching to the overbought zone and is giving a similar signal, which is also weak.

Forex recommendations: in case of breakdown at the level of 77.30, the pair will go to 77.45 and 77.60. If   upward breakdown does not take place the pair will consolidate close to the current levels.

Today, Prime minister of Japan Naoto Khan announced his resignation as a Prime Minister and leader of Democratic Party of Japan (DPJ). Now, all further policy of the country, including the issue of currency intervention will depend on the new head of the government. It is assumed that ex Minister of Foreign Affairs Seiji Maehara can take over position of Prime-Minister.

According to 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 Japan will demonstrate the rise of economy next quarter.

Representative of Japanese monetary authorities Mr. Noda said earlier that government elaborates on the solution for the problem of expensive Yen and it is possible that the third edition of the emergency budget will contain measures to support economy which suffers from impact of expensive YPY. According to the politician, close cooperation of the Big Seven and of Big 20 can contribute to complete turnaround in the ascending channel of the JPY.

Earlier this week, Rating Agency Moody's reported that rating of Japan had been downgraded to AA3. According to Moody’s the country is under the threat of high level of budget deficit, which has already reached 200% of GDP. In addition, the memorandum has mentioned aftermaths of the disaster in March and ministerial changes that take place too often in the past five years.

In addition, Japanese authorities also said that they are going to invest up to $100 billion to fight against expensive Yen. Noda stated in his comments that the reserves of the fiscal year of 2011 can be used in the fight against expensive Yen and that most likely these measures will help to “weaken” the JPY. Finance Ministry explained in the comments that current measures taken by regulator shall be beneficial for the rate of the JPY in the future. It could be the truth in the future, however today the JPY does not respond to the measures and statements and remains close to the highs of March.

 
 

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