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• AUD: sales of Australian Dollar do not subside [11/10/2011]
• JPY: Japanese Yen remains in the narrow trade range [11/10/2011]

JPY: Japanese Yen rate is putting on weight in the middle of the week

The Japanese Yen rate continues to grow for the second consecutive day at the Forex currency market on Wednesday, amid increased interest in the JPY as a safe harbor.

Forex forecast: MACD indicator is in the positive area for the pair USD/JPY and is still rising, confirming a previous buy signal for the pair. Stochastic Oscillator has approached oversold zone today and continues to give a pair sell signal.

Forex recommendations: in case of breakdown at the level of 82.50 the pair will go to 82.20 and 81.80/75.

The deputy head of the Bank of Japan Mr. Yamaguchi stressed this morning that now high rate of national currency neutralizes the factor of high import prices. In addition, he also drew attention to the fact that there is no need to revise forecasts for economic growth with the account of high oil price.

The data released on Wednesday showed that deficit of trade balance in January amounted to Y471.4 billion against expected level of +Y37.1 billion; although it can be only a seasonal factor. The level of import prices increased by 1.4% y/y in January against expectations of the rise by 7.4%; the level of import increased by 12.4% y/y (forecast: +8.1% y/y). 

This week rating agency Moody's Investors Service announced downgrading forecast of Japanese rating, which is Aa2 now, from “stable” to “negative” because growing budget deficit in the country and the lack of effective political measures are the risk factors for the national economy. 

However, it did not affect the rate of the JPY yet: investors are too focused on the external background.

The data published earlier demonstrated that index of activity in all sectors of Japan continued to decline in December: by 0.2% m/m against similar reduction level in November. At the same time experts of Nomura Bank reported last week that the worst stage is over for the economy of the Country of the Rising Sun and the process of economic recovery will accelerate. It agrees with the assessment of the Bank of Japan which emphasized that Japanese economy is strong enough now to cope with consequences of temporary recession. That seems to be an interesting resonance.

In addition the data released earlier showed that revised index of leading indicators in Japan increased by 0.8% in December; while index of coincident indicators was revised to+1.1%. As macro-data showed earlier, actual GDP declined by 0.3% q/q (forecast-2.0% y/y) in QIV, 2010; index of capital expenditures increased by 0.9% q/q in QIV against +1.5% in QIII. Therefore, the main publication earlier this week- Japanese GDP was above forecasts, however this effect can be temporary, since the economy of the country is still in the complex situation. 

 

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