JPY: Japanese Yen returned to weakening

The Japanese Yen rate returned to weakening at the Forex currency market on Tuesday, as expected, after a slight technical correction.

Forex forecast: MACD indicator is in the negative area for the pair USD/JPY and is going upward aiming at crossing the signal line bottom-up, confirming a former buy signal. Stochastic Oscillator stays in the overbought zone today.

Forex recommendations: in case of maintenance of current external background and breakup of the level 84.50 buyers’ targets will become 84.65 and 84.80.

By Tuesday morning the situation in the national economy remains unchanged.
Revised data on Tankan survey was released the day before – as it became known, business confidence of all major companies in Japan after the earthquake on March, 11, increased by 6 points against the increase by 5 points in December. Besides the forecast for June turned out to be at the level of -2 points after the earthquake and tsunami. Before the acts of God the forecast was at +3 points.

Currently it is obvious that aftermath of the earthquake in March will impact on the economy – according to the estimates of the World Bank disasters in Japan in March will reduce GDP of the country in the middle of this year by 0.25%-0.5%; however it is possible that rapid economic growth will follow after that.

It is likely that in the medium term the Japanese Yen rate in the pair USD/JPY may weaken to 85.0.
Meanwhile Bank of Japan continues working on reduction of negative consequences influence for financial sector: presumably, the Ministry of Finance will sell 310 bln yen of government debt and 250 bln of 10-year bonds on April, 7.

Manufacturing PMI in Japan according to Nomura decreased to the level of 46.4 points in March against the level of 52.9 points seen in February. The data is of no surprise taking into consideration the ravages after earthquake in March and the following tsunami.
Statistics for March came out weak as expected: the level of Small Business Confidence decreased to 49.5 points in March against the level of 56.6 points seen in February.

 

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