Forex forecast: MACD indicator is in the negative area for the pair USD/JPY; it is going upward, while volumes are low, and is giving a moderate buy signal. Stochastic Oscillator has come into overbought zone and maintains a buy signal.
Forex recommendations: in case of breakdown at the level of 77.70, the pair will go to 77.85 and 78.10. Consolidation near the current levels is not excluded.
The data released this morning showed that GDP in Japan fell by 2.3% y/y in Q4 2011, as European crisis and global slowdown in economic rate prevented recovery after natural disaster. Therefore, pressure on the Bank of Japan, which intends to hold a meeting on Tuesday, is growing. New measures to support economy are expected from the regulator.
The reasons for the slump in GDP in the Country of the Rising Sun are obvious: decline in global consumption and aftermaths of earthquake and tsunami, as well as the flood in Thailand.
It is quite possible that Japanese economy will rise by 1.4-1.6% this quarter and will be able to demonstrate growth of1.7% at the end of the year. IMF gave similar estimates.
The head of the Bank of Japan Mr. Shirakawa said earlier that the regulator is prepared to reconsider volume of the asset repurchase program depending on the state of economy. Market has heard suchal legations for several months already; however the Yen steps back for neither monetary nor natural reason. Investors have lost interest in currencies -"safe" har bours, and appetite to risk is visible to unaided eye.
Meanwhile, domestic situation in the Country of the Rising Sun is complex. The fact that cannot be disregarded is that trade deficit has been recorded in Japan for the first time in 30 years. Exports in the country fell in December for the third time, which triggered trade deficit on annual basis. According to the Ministry of Finance, shipments reduced by 8%y/y last month. Budget deficit in Japan amounted to $32 billion (2.49 trillion yen). It seems that Japanese economy has been deprived of one of the main supportive tools - its exports. It seems that political vacuum has been created in Japan; the head of the Bank of Japan Mr. Shirakawa noted this morning that master politicians are required to fight effectively against both expensive Yen and deflation.