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Home / Analytics / Forex analysis & forecasts / Forex Fundamental analysis / The Yen is retreating very unwillingly. Overview for 31.05.2016
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The Yen is retreating very unwillingly. Overview for 31.05.2016

On Tuesday, the USD/JPY pair is trading downwards a little bit, but on a global scale the Yen is retreating, although unwillingly.

The Japanese Yen is once again in the limelight of the currency markets and the country’s monetary authorities. This spring, the Yen was too expensive and it forced the BoJ think about interventions, which were received by the global community without enthusiasm. The fact that the BoJ is back to control foreign exchange rates “manually” means that the strong national currency does a lot of harm to the Japanese economy and interferes with the processes to start the inflation. This version may well become true and the regulator will continue considering the idea of “suppressing” the growth of the Yen in different areas. The current quote for the pair is 110.95.

Today’s statistics provided us with a lot of interesting information. The Japanese household spendings in April increased by 0.2% y/y against the expected decrease by 1.4%. The unemployment rate in the previous month remained the same at 3.2%, and the industrial production added 2.2% on a year-on-year basis and 0.3% on a month-on-month basis. These reports are good; they look strong at the time when the country’s financial system is stimulated. The number of construction orders in Japan in April reduced by 16.9% y/y, although the number of foundations for new buildings increased by 9.0% y/y against the expected 3.5% y/y.

During his morning speech, the finance minister of Japan, Tarō Asō, once more mentioned the importance of fight against the deflation as the most essential and primary objective of his department. “Abenomics” has been already operating in the country for several years and it pays off, although consumer sentiments are still quite moderate and the buyer interest is rather low.

The Japanese statistics are rather positive thanks to the long-term QE program, but this is the way it’s supposed to be. Inflation problems have a lot of layers and cannot be solved instantaneously, but the progress is obvious. The expensive Yen is interferes with inflation targets and the BoJ might be able to find some other “leverage” to put pressure upon the Yen without interventions.
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