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At the Forex currency market the Japanese Yen rate continues to rise in price on Friday morning due to weak USD and lack of real decisions on the limits of the U.S. public debt.

Forex forecast: MACD indicator is in the negative area for the pair USD/CHF, and is going down, shaping a sell signal; volumes are high. Stochastic Oscillator goes down in the neutral zone, giving a sell signal and coming very close to the oversold zone.

Forex recommendations: in case of breakdown at the level of 77.40, the pair will go to 77.30 and 77.10.

The following Japanese statistics was released today:

– Net national CPI increased by 0.4% in June against the forecast of +0.5%;

– Household spending in June - 4.2% y/y;

– Preliminary volume of industrial output increased by 3.9% m/m (-1.6% y/y) in June against the forecast of +4.5% m/m;

– Unemployment rate in June: 4.6%.

The data leads to two general conclusions: industrial production is still too poor, household spending continues to decline. Both of these two indicators are in the unfavourable state.

According to the Finance Minister Mr. Noda, current dynamics of the Yen does not correspond to fundamental indicators; however it is necessary to carry out thorough analysis to decide for how long actual situation at Forex can be left unattended.

Representative of the Bank of Japan Mr. Yamaguchi said that high rate of the JPY had no effect on the actual state of economy.

Exports in Japan decreased by 1.6% y/y last month against the forecast of decline by 4.1% y/y; imports rose by 9.8% y/y, while expected growth had been 11.0% y/y.

Trade balance in Japan increased to the level of +Y70.7 billion in June against the forecast of -Y149.0 billion; therefore the balance exceeded limits of the two-month downfall of deficit. It is of interest that starting from this June the Bank of Japan is going to raise its estimate for economic growth in the country, as the growth in the production volumes has triggered revival of exports, and, at the same time, private demand is also growing.

At the last meeting, the Bank of Japan decided to leave interest rate unchanged in the target range of 0-0.1% per annum, as expected.

Lending program was also left unchanged in the amount of 30 trillion yen. According to the Bank estimates, 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%.

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