Forex Blog
Blog-FX.Com

The Japanese Yen rate is traded downward at the Forex currency market on Tuesday morning, as the Bank of Japan has proposed new fiscal measures to normalize financial situation in the country.

Forex forecast: MACD indicator for the pair USD/JPY is in the negative area and is going down, giving a pair sell signal. Stochastic Oscillator goes up in the neutral zone, giving a pair buy signal.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 80.40 the pair will go to 80.50 and 80.70. If upward breakdown does not take place, the pair will consolidate in the current range. As it became known on Tuesday, the Bank of Japan decided to leave interest rate unchanged, in the target range of 0-0.1% per annum. In addition, the regulator announced the launch of a new lending program at a rate of 0.1%; the amount of available funds will be Y500 billion. This measure is aimed at supporting economic recovery and can maintain the process of recovery that is hardly visible at the moment.

The head of the Bank of Japan Mr. Shirakawa said in the middle of the week that economy of the country is still under severe pressure and its recovery is expected in the second half of the fiscal year. According to him shortage in supply is decreasing faster than expected; however excessive focus on the level of business activity can lead to risksIt became known earlier that revised real GDP in Japan fell by 0.9% on quarterly basis (-3.5% y/y) in Q1 against the forecast of -0.8%. This data only confirms the view that Japanese economy is weak – GDP fell lower than expected, although the forecast had been quite pessimistic.

According to the data released earlier trade balance deficit in May (first 20 days) rose to Y1.053 trillion against the level of Y465 billion in April. It also became known that exports volume for the first 20 days in May totaled - 9.3% y/y versus the fall of -12.4% in April.

Preliminary volume of retail sales 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 the increase of 0.2% in April. Japan has confronted with the rise in inflation for the first time over 28 months, which is crucial for the economy; however, it requires confirmation over the next few months. Japanese consumer prices grew by 0.6% y/y excluding food, and prices for utilities and food skyrocketed.

Tags: