Forex Blog
Blog-FX.Com

At the Forex currency market the Japanese yen rate is traded upward on Monday; however the pair USDF/JPY still fails to consolidate above 77.50.

Forex forecast: MACD indicator for the pair USD/JPY is moving along the signal line in the positive area and weak buy signal.

Forex recommendations: off the market.

Feasible event scenario: in case of breakdown at the level of 77.50, the pair will go to 77.40 and 77.20. If downward breakdown does not take place, the pair will consolidate at the current levels.

The return of investors who wish to sit out uneasy times in the safe currency has become the major catalyst for the consolidation of the JPY.

In terms of macro-economic situation in Japan is stable.

It became known at the end of last week that real GDP in Japan was revised downward to +1.4% q/q (+5.6% y/y) in Q3 against preliminary +1.5% q/q (+6.0% y/y). New block of statistics showed that surplus of current account in Japan amounted to Y562.4 billion in October, demonstrating a fall of 62.4% y/y. Morning statistics also showed that volume of credit outstanding in the country increased by 0.2% y/y last month. It indicates the increase in demand for corporate financing and can be perceived positively. Level of bank lending is also growing steadily (+0.2% y/y in November: +0.1% y/y in October; -0.3% y/y in September).

Unemployment rate in Japan increased to 4.5% in October against the level of 4.1% in September, while expectations were at 4.2%. The rate is increasing for the first time in three months, which is an indication of a new round of slowdown in Japanese economy. Large funds have been invested into Japanese economy following the earthquake in March, which explains fairly rapid recovery; however the rate of recovery started to decelerate lately. It should be closely tracked to what extent European economic slump would affect Japanese economy. It became known earlier that preliminary index of coincident indicators in Japan increased by 1.3points in October.

The head of the Bank of Japan Mr. Shirakawa noted earlier that growth of the JPY continues to negatively impact on the local economy and that current rise of the JPY was provoked by European crisis. He believes that if appropriate measures are not taken straight away, economy of Japan will decline sharply by 2030. Mr. Shirakawa also noted that interventions against Yen are acceptable and effective. However, practical steps to support the words have not been made: apparently the Japanese regulator is in the “fly-through mode” presently moreover, the Yen does not give grounds for intervention due to its moderate activity.

Tags: