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At the Forex currency market the Japanese Yen rate continues to weaken at the beginning of the week. Judging by the intraday dynamics Positive sentiments and optimism predominate at the market at the moment and interest in “quiet harbor” is fading away.

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

Forex recommendations: in case of breakdown at the level of 77.25, the pair will go to 77.40 and 77.50. If upward breakdown does not take place, the pair will consolidate at the current levels.

While markets are inspired by speedy resolution to debt problems in Eurozone, interest in JPY is fading away rapidly: demand for safe currency is low, as players are ready to take risk.

In other respects macro economic situation in the Country of the Rising Sun remains almost unchanged. Except for the statistics released this morning which demonstrated that revised industrial output in Japan rose by 0.6% m/m (+0.4%y/y), below expectations. It became known today that money supply M2 in Japan increased by 2.7% y/y, which agreed with the forecast. In addition, corporate goods price index rose by 2.5% y/y in September, which agreed with expectations. Tankan business survey published this week, showed that expectations of the large industrial enterprises amounted to +2 points in September against the forecast of +3 points. Expectations of large non-industrial enterprises demonstrated decline of 11 points versus the forecast of -14 points and -21 points previously. Total current account surplus in Japan amounted to Y407.5 billion in August against the forecast of Y462 billion. In addition, consumer confidence index in Japan declined to 38.6 points in September against the forecast of 37.2 points.

From the fundamental point of view Japanese economy is stable as far as it is possible after the disaster in March. However, the impact of the expensive Yen can provoke resumption of talk about mitigation of fiscal conditions. At a two-day meeting last week the Bank of Japan left interest rate the level of 0.10% per annum, as expected. Regulator has commented that he is going to continue lending program until 30 April 2012. The Bank has refrained additional stimulation of the economy deciding to wait for the more complete results. Volume of assets purchase was maintained at 50 trillion yen.

Statistics released earlier showed that real revised GDP in Japan fell by 0.5% q/q (-2.1% y/y) in Q2 against the forecast of -0.5% q/q (-2.0% y/y) and previous level of -0.3% q/q. Large information block released at the end of last week included the following piece of information about inflation: base national CPI amounted to +0.2% y/y in August. In addition, it also became known that unemployment fell to 4.3% in August against the forecast of 4.7% and previous level of 4.7%.

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