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At the Forex currency market the Japanese Yen rate began to rise today in pairing with the USD after the drastic fall caused by the intervention last week. Apparently the regulator of Japan will have to pour additional funds to the market to maintain the effect of expansion.

Forex forecast: MACD indicator is in the negative area for the pair and is going down, maintaining a pair sell signal. Stochastic Oscillator is coming into the overbought zone today, giving a pair buy signal.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 81.00 the pair will go to 81.20 and 81.50. If the pair breaks down the level of 80.80 under the pressure from the technical correction, traders’ targets will become the levels of 80.60 and 80.45/40.
According to the estimates of the World Bank, disasters in Japan- earthquake and tsunami in March will reduce GDP of the country in the middle of this year by 0.25%-0.5% ; however it is possible that rapid economic growth will follow after that.

World Bank has come to a conclusion that within the next 5 years economic growth pace in the Country of the Rising Sun will accelerate due to the significant efforts of Japan to restore from devastation. In general the cost of damage is estimated at $122-235 billion, or 2.5-4% of the country’s GDP.

We would remind that the Yen was shaken up last week: countries of the “ Big Seven” agreed to start currency intervention together in order to ease pressure of the expensive Yen on the weak economy of Japan. Therefore, on 18 March authorities of the USA, Great Britain, Canada and ECB have joined the Bank of Japan- the intervention started at 9 am Tokyo time. Half an hour later the JPY collapsed by 3.1% in pairing the USD and continued to fall further.

As noted by the representative of the Bank of Japan Noda, countries of B7 can conduct intervention, using the pair Euro/Yan. Currency intervention is not aimed at certain levels.

The situation remains tense in Japan: it became known earlier that radiation background near the atomic power station in Fukishima is at extremely high level due to the accident at the power generating unit caused by the earthquake and tsunami; smoke can be seen over the third reactor.

Central Bank of Japan has repurchased debt securities from the market in the amount of 2 trillion yen on 17-18 March. Closure of financial market due to stock market panic is not planned. In addition, starting from 22 March the Bank of Japan intends to offer bonds to the market in the amount of 300 billion yen – received funds will be spent for reconstruction. In addition, Central Bank has already poured $87.5 billion to reassure stock markets where the panic started last week. Private Banks can count on this fund to issue short term loans. The regulator will also allocate $220 billion to rebuild national economy, which has not been strong before, and recent developments will become extremely hard burden for it. 

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