JPY: Yen sunk to the 8 months lows

At the Forex currency market the rate of the pair USD/JPY soared to the highs of 8 months, however the Yen continued to decline despite quite favourable news from Japan.

Forex forecast: MACD indicator is in the positive area for the pair USD/JPY on Friday and it goes up, confirming a previous buy signal for the pair. Stochastic Oscillator is giving a similar signal today, being in the oversold area.

Forex recommendations: buyers’ targets today will be the levels of 84.30 and 84.50.

As the data released today showed, level of deflation began its recession in Japan. Thus, consumer prices continued to decline in October, which became the twentieth consecutive reduction of the index; although its pace has obviously slowed down.

Economists note 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. Note, it is not clear yet whether this trend will consolidate or not.

The JPY has hardly responded to the morning’s statistics.

Representative of the Bank of Japan Mr. Nakamura noted on Thursday morning that high rate of the Yen has already left an imprint on the national economy and on the stock market volatility. In his view, growth of the JPY can trigger downward pressure on the level of domestic prices.
Nakamura reiterated that Central Bank will take measures in the economy if the need arises, however purchase of assets by the Bank of Japan is not aimed to stimulate the rise in demand for such securities.

The rates of the Bank of Japan have 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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