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Home / Analytics / Forex analysis & forecasts / Forex Fundamental analysis / The Yen perseveres in its attempts to strengthen. Overview for 01.04.2016
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The Yen perseveres in its attempts to strengthen. Overview for 01.04.2016

The USD/JPY pair is trading downwards; the fact that the Dollar is weak remains in effect.

The Japanese Yen is strengthening again. In general, the Yen “has used” the weak Dollar for its own benefit for the entire week. However, this new wave of growth may be quite expensive for the budget and local exporters. The current quote for the instrument is 112.17.

Today’s statistics indicated that Tankan Index of Sentiment at Large Manufacturers, which is closely followed by the Bank of Japan, in the first quarter fell up to 6 points against the previous number of 12. The forecast assumed less aggressive decline, up to 8 points. So far, Tankan statistics is in the positive zone, which implies quite stable business sentiment. The stronger the data on Tankan is, the more the national currency is supported.  However, today of all days when the Japanese Yen didn’t pay much attention to the report, because right now investors are more interested in the speculative fact of the weak US Dollar.

Index of Sentiment at Large Manufacturers in tertiary industry also reduced in the first quarter from 25 to 22 points. The predicted decline was up to 23 points.

This decline in sentiment may indicate that the economy motivation program, as it is today, doesn’t produce the effect, which was planned in the first place. Right now, the interest rates in Japan are negative, and this tool of the monetary policy was counted on a lot. It looks like it would provide support to the industrial sector in the second quarter.   

However, it should be noted that the negative rates policy can’t last too long. In means that over the next three months the BoJ will have to find another, more long-term tool, to replace the previous one.
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