JPY: Japanese Yen is growing amid external background at the beginning of the week

The Japanese Yen rate is growing slightly at the Forex currency market on Monday, supported by the developments in Egypt and gaining strength as a protective asset. 

Forex forecast: MACD indicator is in the negative area for the pair USD/JPY and it resumed decline again giving a pair sell signal. Stochastic Oscillator is giving a similar signal, being in the neutral zone.

Forex recommendations: if bearish sentiment will be maintained and in case of breakdown at the level of 82.00 the pair will go to 81.75 and 81.30.
Japanese authorities continue to face the future with optimism, now raising assessment of the industrial output as well on the basis of the growth rate of exports.

Thus, industrial output increased by 3.1% m/m in December against the growth by 1.0% m/m in November and the forecast of 2.9% m/m. Authorities of the Country of the Rising Sun expect that the index will rise by 5.7% in January, and will reduce by 1.7% in February. We would remind that export rate increased by 13.0% y/y last month.

It is not excluded that demand abroad, in the USA and China, will push levels of exports in Japan to continue its growth and then production will get a support. At the moment it is obvious that Japan has come out of the state of stupor in regard to production, however it is still unclear if it will continue this momentum.

Japanese data released last Friday was mostly favourable: unemployment and number of new jobs became a positive factor for the Japanese economy, however consumption sector is still in crisis (unemployment rate in December: 4.9% against 5.1% in November; net CPI in December:-0.4% y/y against -0.5% earlier; consumer expenditure in December: 3.3% against the forecast of -0.6%).

However, we should keep in mind that yesterday, rating agency S&P reported downgrade of Japan to the level of AA- which led to the massive sales of the JPY. Later, representatives of the agency Fitch stressed that Japan needs more stable financial policy than it is now.

A two-day meeting of the Bank of Japan finished the day before yesterday; at the meeting it was decided to keep interest rate in the previous target range of 0-0.1% per annum.  The head of the Bank of Japan Mr. Shirakawa noted in the follow- up comments that the country continues to move towards achieving price stability and at the moment both upside and downside risks to the economy are stabilized.
 

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