JPY: Japanese Yen is still the power of buyers and volatility
At the Forex currency market the Japanese Yen rate is traded slightly downward at the beginning of the week after the rise last Friday. Dynamics in demand for the JPY clearly illustrates to what extent investors are uncertain of the plan of European recovery.
Forex forecast: MACD indicator for the pair USD/JPY is in the negative area, coming close to the signal line and moving along it, not giving a clear signal. Stochastic Oscillator is in the neutral zone, shaping a sell signal.
Forex recommendations: in case of breakdown at the level of 76.10, the pair will go to 76.00 and 75.80. If downward breakdown does not take place, the pair will consolidate at the current levels.
Apparently, high demand in Japanese Yen is based on markets’ uncertainty that plan to rescue Eurozone which is going to be presented by Germany and France this Wednesday will work and really improve economy in the region.
Meanwhile, anti-inflation strategy is nearly ready in Japan; the country is prepared to announce additional infusion of 2 trillion yen to help companies-exporters which suffered from overvalued national currency. Another 2 trillion yen will be used in the employment sector.
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 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. According to him situation in Japan is stable at the moment and authorities expect revival of the economic growth soon.
The Yen increased by 6% this year, thus, forcing Government to take measures.
Final orders for industrial equipment in Japan increased by 20.1% in September against the growth of 20.3% in August; Association of machine-tool construction industry of Japan stated that last month the index had reached the lowest level since 2009. According to the data released yesterday revised industrial production in Japan rose by 0.6% m/m (+0.4% y/y) in August; below expectations.
