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The Japanese Yen rate isstrengthening slightly at the Forex currency market on Monday morning after twodays of significant sales, which shows that investors are interested in the Yenas a protective currency.

Forex forecast: MACD indicatorfor the pair USD/JPY is in the negative area and is moving along the signalline, not giving a clear signal. Stochastic Oscillator goes down in the neutralzone, giving a sell signal.

Forex recommendations: off themarket.

Feasible event scenario atForex: in case of breakdown at the level of 80.20 the pair will go to 80.40and 80.55. If upward breakdown does not take place, the pair will go to 80.00.

It became known today thattrade balance deficit amounted to Y853.7 billion (forecast –Y710.1billion) in May against the surplus a year earlier. It became known earlierthat revised real GDP in Japan fell by 0.9% on quarterly basis (-3.5% y/y) inQ1 against the forecast of -0.8%. This data only confirms the view thatJapanese economy is weak – GDP fell lower than expected, although theforecast had been quite pessimistic. According to the data released earliertrade balance deficit in May (first 20 days) rose to Y1.053 trillion againstthe level of Y465 billion in April. It also became known that exports volumefor the first 20 days in May totaled - 9.3% y/y versus the fall of -12.4% inApril.

The Bank of Japan stressed lastFriday that the rise in exports and in consumer sentiment is noticeable; whileuncertainty in the economy is fading away and we can expect improvement in thegeneral state of economy in the Country of the Rising Sun.

Last week, Finance Minister ofJapan Mr. Noda, who has not been in public for quite a long time, said thatauthorities continue to closely monitor currency market; and they remainconfident that currency rates should reflect macro-economic foundation. In theevent that motion will be chaotic in nature, Finance Ministry intends to takedrastic measures. The head of the Bank of Japan Mr. Shirakawasaid in the middle of the week that economy of the country is still undersevere pressure and its recovery is expected in the second half of the fiscalyear. According to him shortage in supply is decreasing faster than expected;however excessive focus on the level of business activity can lead to risks.

Preliminary volume of retailsales 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 theincrease of 0.2% in April. Japan has confronted with the rise in inflation forthe first time over 28 months, which is crucial for the economy; however, itrequires confirmation over the next few months. Japanese consumer prices grewby 0.6% y/y excluding food, and prices for utilities and food skyrocketed.

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