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Home / Analytics / Forex analysis & forecasts / Forex Fundamental analysis / The Yen is strengthened by investors’ fears. Overview for 26.07.2016
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The Yen is strengthened by investors’ fears. Overview for 26.07.2016

The USD/JPY pair is trading to the downside expecting the results of the USA FOMC’s and the BoJ’s meetings.

The Japanese Yen is strengthening actively on Tuesday. The current quote for the pair is 104.38. It’s too early to talk about a possible trend reverse in the instrument, but the price may well continue moving in the same direction until the end of the week.  

The Japanese economic minister, Mr. Ishihara, emphasized during his speech today that the economic situation in Japan wouldn’t improve if reforms weren’t implemented on a continuing basis. Politicians talk about structural forms, economic conditions improvement by stage, and a new phase of the economy development. For all of these, there must be the QE program and the domestic demand at least. Japan has no problems with the first, but some with the second.

According to Ishihara, it’s necessary to connect the salary growth in the country with the economic expansion rate. It’s very clear on the paper, but in the real world this strategy might fail: with salaries not increasing, consumers demand will instantaneously plummet to zero.

The Yen hardly ever responds to such comments. But it’s very sensitive to any fiscal events. This Friday, the BoJ’s meeting will take place and investors have a lot of doubts about its results. Everyone is waiting that the Bank of Japan will mention expansion of the QE program. So far, the market heard only one rumor, which is relating to the Japanese government and its intentions to introduce an array of incentives worth 6 trillion Yens. The market has already calculated and now it’s disappointed, thinking that this money is not enough – at least 10 trillion are required in terms of tax and budgetary systems.
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