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Japanese Yen continues to grow at the Forex currency market on Thursday morning: demand for “safe harbor” increases, moreover, political changes in the government are also favourable for the JPY.   

Forex forecast: MACD indicator is in the negative area for the pair USD/JPY, it is moving along the signal line, not giving any signals. Stochastic Oscillator goes down in the neutral zone, giving a sell signal.

Forex recommendations: in case of breakdown at the level of 76.40, the pair will go to 76.20 and 76.00.

If   downward breakdown does not take place, the pair will consolidate at the current levels.The Yen continues to take advantage of the political changes in the government: former Finance Minister Yosihiko Noda was elected the head of the Government of Japan. Terms of office of the ex- Prime Minister Kan expired on Tuesday.

Now market will watch how consistent Noda is going to be in the monetary policy- he has already outlined three main areas of work in this post, one of it includes the fight against expensive JPY.It became known yesterday that number of begun housing construction in Japan rose by 21.2% in July against the growth of 5.8% in June. In addition, preliminary volume of industrial output in Japan increased by 0.6% m/m in July against the growth of 3.8% a month earlier.

The data was weak, which was to the advantage of the growing Yen, which normally moves in the direction opposite to the markets’ sentiment.We would remind that Rating Agency Moody's reported that rating of Japan had been downgraded to AA3. According to Moody’s the country is under the threat of high level of budget deficit, which has already reached 200% of GDP.

In addition, the memorandum has mentioned aftermaths of the disaster in March and ministerial changes that take place too often in the past five years. In addition, Japanese authorities also said that they are going to invest up to $100 billion to fight against expensive Yen. Noda stated in his comments that the reserves of the fiscal year of 2011 can be used in the fight against expensive Yen and that most likely these measures will help to “weaken” the JPY.

Finance Ministry explained in the comments that current measures taken by regulator shall be beneficial for the rate of the JPY in the future. According to 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.

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