JPY: Japanese Yen remains close to local highs
At the Forex currency market the Japanese Yen rate remains in the range of 80.10-80.94 for the fourth consecutive day on Tuesday, staying close to the local highs as a safe currency amid investors’ aversion to risk.
Forex forecast: MACD indicator for the pair USD/JPY has crossed the signal line from top to bottom, giving a pair sell signal. Stochastic Oscillator goes up in the neutral zone, giving a pair buy signal.
Forex recommendations: off the market.
Feasible event scenario at Forex: in case of breakdown at the level of 80.60 the pair will go to 80.75 and 80.90. If the level of 80.30 is exceeded, traders’ target will be the level of 80.10.
The situation remains almost unchanged in the Japanese economy this morning.
The minutes of the Bank of Japan meeting of 6-7 April was released yesterday; it says that some members of the CB believe that the policy of quantitative easing in March had a positive impact on the state of the financial market and business confidence; however it is still required to monitor carefully the effect of the high prices of commodity.
In addition, the Bank of Japan is concerned about the effects of the interest rates rise by the European Central Bank.
In regards to the YPY rate, the document indicates that weak Yen positively affects the state of the capital expenditures. It should be taken into consideration that the meeting took place at the beginning of April when the YPY was really weak.
Japan considers the possibility of raising taxes up to 15% of the sales tax from the current 10%. It became known earlier that surplus of trade balance amounted to Y196.5 billion in March against the level of Y931.94 billion a year earlier; tertiary index rose by 0.8% m/m in February against the fall by 0.1% in January - Japanese economy had really expanded, at least before the earthquake in March. Meanwhile, the level of export decreased by 2.2% y/y in March, while level of import increased by 11.9% y/y which is logical.
Note that the Bank of Japan believes that real GDP will rise by 0.6% this year against the forecast of growth by 1.6% in January.
The head of the Bank of Japan Mr. Shirakawa said earlier that following the results of quarters I and II, it can be expected that level of GDP will decline due to the serious aftermath of the earthquake in March. He thinks that the main problem is the shutdown of the production facilities, which in any way or other is connected with the power failure. Shirakawa believes that as soon as the power supply will reach the level of 11 March, production capacity will be restored. At the same time Central Bank is still ready to take measures to support economy, if required.
