JPY: Japanese Yen is not going to slow down its growth rate
The Japanese Yen rate continues to rise at the Forex currency market on Thursday despite decisions of the Bank of Japan.
Forex forecast: MACD indicator for the pair USD/JPY is in the negative area, and started to decline, giving a sell signal; volumes are increasing. Stochastic Oscillator is still near the oversold zone, shaping a similar signal.
Forex recommendations: in case of breakdown at the level of 75.80, the pair will go to 75.65 and 75.50. If downward breakdown does not take place, the pair will consolidate at the current levels.
The Bank of Japan left interest rate in the previous range of 0-0.1% per annum, as expected, at the same time, increasing program of asset purchases to Y50 trillion from Y55 trillion.
In the follow-up comments Japanese regulator stressed that risks to economy shall be thoroughly considered as well as downside risks to price forecast in the future.
According to the estimates of the Bank of Japan exchange rate of the Yen will remain high for a while, the Bank has not clarified if currency intervention threatens the JPY or not.
We would remind that this week, there was information in Japanese press that the Bank of Japan is planning to discuss with the largest world’s regulators a chance of common intervention.
From the fundamental point of view Japanese economy is stable as far as it is possible after the disaster in March. However, the impact of the expensive Yen can provoke resumption of talk about mitigation of fiscal conditions. At a two-day meeting last week the Bank of Japan left interest rate the level of 0.10% per annum, as expected. Regulator has commented that he is going to continue lending program until 30 April 2012. The Bank has refrained additional stimulation of the economy deciding to wait for the more complete results. Volume of assets purchase was maintained at 50 trillion yen. The head of the Bank of Japan Mr Shirakawa had confirmed this earlier when he said that it is necessary to monitor carefully the impact of the European debt crisis on the Japanese economy, including Forex market and commodity platforms.
Newly appointed Finance Minister of Japan Mr. Adzumi said that regulator is ready to take decisive measures if the JPY continues to grow, despite the fact that recent rise in the rate of the national currency is the result of speculations. At the same time the Bank of Japan is aware that dynamics of the Yen is based not on the fundamental data but only on the targets of speculators; therefore injections would need to be voluminous and cyclic.
