JPY: Japanese Yen tends towards upper bound of corridor

At the Forex currency market on Tuesday, the Japanese Yen rate is moving away from the highs of March that it had reached once again earlier; it is still in the two-week range, however tends towards its upper bound. 

Forex forecast: MACD indicator is in the negative area for the pair USD/JPY, and is moving along the signal line, not giving a clear signal. Stochastic Oscillator is moving upward in the neutral zone; and started to shape a buy signal.

Forex recommendations: in case of breakdown at the level of 76.85, the pair will go to 77.00 and 77.50.

If   upward breakdown does not take place the pair will consolidate close to the current levels.Japanese economic structure does not represent any fundamental changes this morning. For the time being, quotes of Yen’s exchange rate are based only on the preferences of the market, which are obviously in favour of the safe currency; however such situation is unlikely to last long.

Market is in anticipation of new round of currency intervention which can exceed 5 trillion yen this time.  According to the previous estimates of the Bank of Japan, real level of GDP will rise by 0.4% in the fiscal year of 2011 (forecast of April had been more optimistic: +0.6%). In the fiscal year of 2012, GDP growth is expected in the volume of 2.9% which would agree with the April forecast. Next year CPI is predicted to be at the level of +0.7%. Real GDP in Japan decreased by 0.2% on quarterly basis (-1.3% y/y) in Q2.

GDP fell less than expected, and Minister of Finance of the country of the rising sun said that Japan will demonstrate the rise of economy next quarter. It became known earlier that leading indicators index in Japan was left unrevised, showing growth by 3.8 points against the rise of 3.4 points in May. At the same time, coincident indicators index in Japan increased by 2.7 points in June against the growth of 2.6 points in May.

The data released earlier showed that composite index of consumer confidence in Japan increased to 37.0 points in July against the value of 35.3 points in June. It also became known that current account surplus in Japan was -50.2% y/y in June, Y526.9 billion against decline of 51.7% y/y in May. It became known also that revised volume of industrial output in Japan increased by 3.8% m/m in June against preliminary value of +3.9% m/m.

Representative of Japanese monetary authorities Mr. Noda said earlier that government elaborates on the solution for the problem of expensive Yen and it is possible that the third edition of the emergency budget will contain measures to support economy which suffers from impact of expensive YPY.

According to the politician, close cooperation of the Big Seven and of Big 20 can contribute to complete turnaround in the ascending channel of the JPY. 

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