JPY: Japanese Yen is slowly reverting to strengthening

At the Forex currency market the Japanese Yen rate is strengthening on Friday after a short break in the middle of this week. Investors believe that the effect of the previous currency intervention is sufficient and new intervention will not take place soon.

Forex forecast: MACD indicator for the pair USD/JPY is traded in the positive area and is going upward steadily at the volumes, which are above average now, and is giving a buy signal. Oscillator reverses quickly in the neutral zone and indicates  moderate sale today.

Forex recommendations: in case of breakdown at the level of 77.35, the pair will go to 77.20 and 77.10. If downward breakdown does not take place, the pair will consolidate at the current levels.

Today, Association of Economic Planning of the Cabinet of Japan arose market’s interest in new macro statistics forecasts. Thus, as per their estimates, real GDP in Japan will rise by 0.24% in the fiscal year of 2011 against the forecast in October of  +0,22%. In 2012 fiscal year GDP will increase by 2.22% (+2.30% previously). Net CPI this year will amount to -0.12% (-0.15% forecast in October), and in 2013 net inflation will be +0.18%.

It became known earlier that index of economic observers rose to 45.9 points in October versus 45.3 points in September. This has been the first growth of the index in three months, which is a positive indication for Japan, despite weakness of the economy in general.

Last week was very eventful for Japan. Thus 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%.

In addition, regulator 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.