JPY: Japanese Yen maintains stability at the beginning of the week; indicators are ambiguous

At the Forex currency market the Japanese Yen remains stable on Monday due to various factors: firstly it is unrest in the Middle East that forces investors to turn to safe harbors, and the Yen is one of them, and secondly, there are no American investors at the market because they celebrate President Day today.

Forex forecast: MACD indicator is in the positive area for the pair USD/JPY and continues to go up, confirming previous buy signals for the pair. Stochastic Oscillator has come into oversold zone today and is giving a pair sell signal.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 83.25 the pair will go to 83.50 and 83.70/80. If the level of 83.00 is exceeded, traders’ targets will be the levels of 82.70 and 82.40/50.

The data released today showed thatindex of activity in all sectors of Japan continues to decline: by 0.2% m/m against similar level of reduction in November. At the same time experts of Nomura Bank reported last week that the worst stage is over for the economy of the Country of the Rising Sun and the process of economic recovery will accelerate. It agrees with the assessment of the Bank of Japan which emphasized that Japanese economy is strong enough now to cope with consequences of temporary recession. That seems to be an interesting resonance.

In addition the data released earlier showed that revised index of leading indicators in Japan increased by 0.8% in December; while index of coincident indicators was revised to+1.1%. As macro-data showed yesterday, actual GDP declined by 0.3% q/q (forecast-2.0% y/y) in QIV, 2010; index of capital expenditures increased by 0.9% q/q in QIV against +1.5% in QIII. Therefore, the main publication earlier this week- Japanese GDP was above forecasts, however this effect can be temporary, since the economy of the country is still in the complex situation.

The minutes of the last meeting of the Bank of Japan on 25-26 January, released today were just a standard document without any further details. Judging by the minutes, it is not yet clear whether the   continuation of the Japanese economy stabilization is worth waiting in the nearest future.

«Only a few committee members think that it is necessary to consider a possibility that steady growth of the global prices for the raw products will have a negative impact on the companies’ profit”. –said the minutes. “Part of the representatives stated that although there is high possibility that economy will revert to the moderate economic recovery, its future remains uncertain yet.

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