JPY: Japanese Yen is under pressure on Monday

The Japanese Yen rate is becoming weaker at the Forex currency market on Monday, because investors   are shifting to Dollar positions.

Forex forecast: MACD indicator for the pair USD/JPY is moving along the signal line and s not giving a clear signal. Stochastic Oscillator goes up in the neutral zone, giving a pair buy signal.

Feasible event scenario at Forex: in case of breakdown at the level of 80.60 the pair will go to 80.80 and 81.10. If upward breakdown does not take place, the pair will consolidate in the current range.

According to the data released last Friday, tertiary activity index rose by 2.6% m/m in April against the fall of 5.9% in March; index of prices for corporate production increased by 2.2% y/y in May against +2.5% in April. Japanese statistics released earlier showed that industrial output in Japan was favourable, however below the forecast. Unemployment rate increased to 4.7%. In addition, household spending continues to demonstrate negative dynamics. In addition, preliminary volume of retail sales in Japan reduced by 4.8% y/y in April against expectations of fall to -6.0% y/y; net CPI in Japan rose by 0.1% y/y in May against the increase of 0.2% in April. Japan has confronted with the rise in inflation for the first time over 28 months, which is crucial for the economy; however, it requires confirmation over the next few months. Japanese consumer prices grew by 0.6% y/y excluding food, and prices for utilities and food skyrocketed.

The head of the Bank of Japan Mr. Shirakawa said in the middle of the week that economy of the country is still under severe pressure and its recovery is expected in the second half of the fiscal year. According to him shortage in supply is decreasing faster than expected; however excessive focus on the level of business activity can lead to risks.

It became known yesterday that revised real GDP in Japan fell by 0.9% on quarterly basis (-3.5% y/y) in Q1 against the forecast of -0.8%.

This data only confirms the view that Japanese economy is weak – GDP fell lower than expected, although the forecast had been quite pessimistic. According to the data released earlier trade balance deficit in May (first 20 days) rose to Y1.053 trillion against the level of Y465 billion in April. It also became known that exports volume for the first 20 days in May totaled - 9.3% y/y versus the fall of -12.4% in April.