JPY: Japanese Yen is under pressure caused by the earthquake

At the Forex currency market the Japanese yen rate started to increase, regaining from the yesterday’s loss; however series of earthquakes which occurred in Japan this morning has slowed down corrective pullback.

Forex forecast: MACD indicator is in the negative area for the pair USD/JPY and it is moving in parallel to the signal line, preventing a clear signal. Stochastic Oscillator has come out of the overbought zone today and started to give a pair sell signal.

 Forex recommendations: in view of the latest event- off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 83.30, buyers’ targets will become the levels of 83.65 and 84.00. It should wait for the official data on the devastation caused by the earthquake to understand which way will the Yen go.

It became known yesterday that real revised level of GDP in Japan declined by 0.3% on quarterly basis (-1.3% y/y) in QIV against preliminary level of -0.3% q/q (-1.1% y/y).

Therefore, Japanese economy has reduced more than expected, which calls into question excessively optimistic statement of the authorities of the country about future outlooks.  Chairman of the Bank of Japan Mr. Yagamuchi said earlier that country’ economy shows signs of recovery: amid the growth of the developing markets, Japan also receives a catalyst to get out of hibernation.

According to the head of the Bank of Japan Mr. Shirakawa, excessive load on the short term inflation can harm price stability in the country: price stability itself is not the foundation of the economic stability; therefore Japan still requires accommodative monetary policy. Shirakawa also thinks that inflation of new bubbles shall be avoided. The data released yesterday showed decline in bank lending in February (- 2.0% y/y against -1.9% y/y in January; and the fall in current account balance in January: (-47.6% y/y (Y461.9 billion) against +30.5% in December).

Interest rate of the Bank of Japan is at its lowest level of 0.1% per annum. The next meeting of the Bank of Japan is scheduled for 16 March. (Other meetings of the regulator will be held on 16 March, 8 April, 23 May, 15 June, 16 July, 15 September, 14 October, 14 November, 13 December).

 

 

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