JPY: Japanese Yen is shifting to growth

At the Forex currency market the Japanese Yen rate is traded upward after movement in the sideways during few last sessions.

Forex forecast: MACD indicator for the pair USD/JPY has broken through the signal line from bottom to top and is traded in the positive area. Oscillator is going down sharply in the neutral zone and is giving a sell signal.

Forex recommendations: in case of breakdown at the level of 77.55, the pair will go to 77.30 and 77.10.  If downward breakdown does not take place, the pair will consolidate at the current levels.

It became known today that index of economic observers in Japan rose to 45.9 points in October against the level of 45.3 points in September. The index has grown for the first time in three months, which is a positive indication for Japan, despite weakness of the economy in general.

We would remind that the Bank of Japan has conducted currency intervention earlier this week in order to relieve pressure of JPY on the national economy. Mr. Adzumi, Finance Minister of Japan, confirmed the fact of infusion into the currency market, which became especially important when the Yen had reached historical highs in pairing with the USD last week. Therefore, Central Bank of Japan has ventured to carry out the third currency intervention since the beginning of the year, which resulted in decline of the Yen by 5%.

As it became known yesterday, preliminary index of coincident indicators in Japan fell by 1.4% m/m in September against the decline of 0.1% m/m last month. It is a negative signal for the Japanese economy, indicating sluggish rate of economic growth if there is any growth at all.

Last week, the Bank of Japan left interest rate in the previous range of 0-0.1% per annum, as expected; at the same time, asset purchase program was increased up 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 forecasts 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 whether currency intervention threatens the JPY or not.

Statistics released last week showed that number of begun housing construction in Japan fell by 10.8% y/y in September against the forecast of growth by 7.6% y/y. In addition, orders in construction sector of Japan declined by 9.3% y/y in September against the growth of 9.3% y/y in August.

It is interesting that surplus of trade balance in Japan has been going down for the third consecutive month; in September it amounted to Y1.585 trillion, which is 21,4% lower than the previous level.