JPY: Yen gathers strength on Tuesday

Japanese Yen rate is traded upward at the Forex currency market on Tuesday – the pair USD/JPY looks overbought for a couple of days, therefore technical correction is relevant.

Forex forecast: MACD indicator is in the positive area for the pair USD/JPY, however it goes down, giving grounds for a pair sell signal. Stochastic oscillator is giving a similar signal on Tuesday, being in the neutral zone.

Forex recommendations: traders’ targets today will be the levels of 83.50 and 82.75.

A lot of Japanese statistics was released today:
– Orders in the construction sector in October: -5.6% y/y against: -15% y/y in September;
– PMI in the manufacturing industry with the account of seasonal fluctuation increased to 47.3 in November against 47.2 in October;
– Preliminary volume of industrial production in October: 1.8% m/m against the forecast of -3.5% and -1.6% m/m in September;
– Unemployment rate in October: 5.1% against 5.0% in September;
– Real household spending in October: -0.4% y/y.

Another important factor is that unemployment rate began to grow again – while the efforts of the local authorities are aimed at solving deflation problem and we were able to witness its initial results last week; however Japanese economy is in a difficult position, which will affected the fundamental indicators at least until the end of the QI next year.

We would remind that consumer prices continued to decline in October that became the twentieth consecutive reduction of the indicator; however the pace of decline has apparently slowed down. Economists noted that deflationary spiral began to unwind following the introduction of high taxes on tobacco products in the country. CPI reduced by 0.6% y/y last month against the fall by 1.1% y/y in September. Nevertheless, Japanese economy will suffer from the consequences of deflation for a long time, which will result in slow pace of the GDP growth in the country and in the levels of exports too.

The head of the Bank of Japan, Mr. Shirakawa said at the beginning of the week that growth in the Yen had both positive and negative sides. Thus, strong Yen had an impact on the export levels, however it stabilized International trading situation in the medium terms as it also affected the reduction of the import prices.The rate of the Bank of Japan has been maintained in the target level of 0-0.1% per annum. In addition at the last meeting the Bank of Japan announced the purchase of the mortgage investment trusts with the rating not lower than AA.

 

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