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At the Forex currency market the Japanese Yen rate is traded upward on Thursday, due to demand from investors who wish to hedge their risks in the declining market.

Forex forecast: MACD indicator for the pair USD/JPY is in the positive area and continues to move along the signal line, not giving aclear signal. Stochastic Oscillator is going down in the neutral zone and isgiving a sell signal.

Forex recommendations: in case of breakdown at the level of 77.60, the pair will go to 77.50 and 77.30. If downward breakdown does not take place,the pair will consolidate at the current levels.

There have not been significant changes in Japan in terms of macro-economy this morning. Demand for the JPY is explained by investors' intention to "sit out" time of turbulence in the safe harbor.

It became known today that preliminary retail sales in Japan fell by 2.3% y/y in November against the forecast of zerochanges, consumer spending reduced by 3.2% y/y in November versus expectationsof decline of 1.1% y/y. In addition, preliminary volume of industrial output decreased by 2.6% m/m in November (-1.5% y/y) against projected value of -0.8%m/m (-2.0% y/y).

The data is not impressive: the pace ofdecline is definitely accelerating, which is a negative factor for the recovering economy of Japan and for the forecasts; nevertheless, the JPY feelsquite at ease. 

The head of the Bank of Japan Mr. Shirakawa noted earlier that growth of the JPY continues to negatively impact on the local economy andthat current rise of the JPY was provoked by European crisis. He believes thatif appropriate measures are not taken straight away, economy of Japan willdecline sharply by 2030. Mr. Shirakawa also notedthat 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 more over, the Yen does not give grounds for intervention due to its moderate activity. 

Statistics released earlier this week, was slightly more optimistic: number of begun housing construction decreased by 0.3% y/y in November against the forecast of decline of 5.0% y/y; orders in the construction sector rose by 21.0% y/y in November versus the growth of 24.3%y/y in October.

In addition, the minutes of the last meeting of the Bank of Japan which was released yesterday, stated that it is necessary to trace back the effect of the recent soft policy; special concern is caused by the potential impact of the expensive Yen. 

We would remind that a meeting of the Bank of Japan, which was held in December, was gloomy. Thus, the regulator noted that growth of economic activity has slowed down and activity in Japanese economy is zero. The Bank has revised economic situation assessment downward in comparison with November, which is logical. Japanese economy will start to recover as soonas pressure from Europe diminishes. 

Interest rate in the country was left unchanged at the level of 0.1%. This decision had been expected.

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