JPY: Japanese Yen weakens at the beginning of the week

At the Forex currency market the Japanese Yen rate weakens in pairing with the USD.

Forex forecast: MACD indicator for the pair USD/JPY is in the negative area, slightly goes up, shaping a buy signal. Stochastic Oscillator is growing in the neutral zone, giving a buy signal.

Forex recommendations: in case of breakdown at the level of 80.90, the pair will go to 81.20 and 81.3 5.

Economic situation in Japan is stable on Monday morning.Apparently, investors do not trust the Yen too much now; even in the situation when currency market is not stable, currency which is considered “a safe harbor”, does not appeal traders enough to break down at 80.00. Statistics remain mixed. Preliminary volume of retail sales in Japan reduced by 4.8% y/y in April against expectations of fall to -6.0% y/y; in addition, 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.Finance Minister of Japan Mr. Noda, who has not been in public for quite a long time, said that authorities continue to closely monitor currency market; and they remain confident that currency rates should reflect macro-economic foundation. In the event that motion will be chaotic in nature, Finance Ministry intends to take drastic measures.

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 is worth noting that trade balance deficit amounted to Y853.7 billion (forecast –Y710.1 billion) against the surplus a year earlier.

It became known earlier 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. 

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