The Yen continues to strengthen
07.05.2014
A drop in the USD / JPY pair was observed for the fourth day in a row, with impressive sales figures – the yen had a positive reaction to the BoJ minutes of the meeting in April.
The slow growth of the economic system and a little more active than expected and strengthening inflation drew the attention of the Bank of Japan. As noted in the report submitted on the April meeting of the Japanese regulator, tough new conditions in the employment sector are forcing the market prices to grow, and that forms a not too stable picture of the economy. The mere presence of only a limited supply pushes prices up, and it may cause instability for the economy of Japan.
At the Bank of Japan, however, they are still not ready to take action on expanding the economic stimulus measures - at least for the immediate future. Markets were expecting a more specific statement, remembering that in April the rate of sales tax was increased. The reaction of the economy will be immediate; there is reason to expect a deceleration of GDP. However, the regulator has taken a pause in the statements for additional mitigation measures to observe the objective reactions. At the moment the volume of injections into the economy of Japan is 60-70 trillion yen annually.
Despite the apparent neutrality of the text of the protocol document, it became another reason for the growth of the yen - if the will not be an increase in stimulations, then, JPY will strengthen. An expensive yen with however damage export revenues.
Whilst the USD/JPY pair has a goal to fall to 101.20/101.00, it is unlikely to fall further.
RoboForex Analytical Department
The slow growth of the economic system and a little more active than expected and strengthening inflation drew the attention of the Bank of Japan. As noted in the report submitted on the April meeting of the Japanese regulator, tough new conditions in the employment sector are forcing the market prices to grow, and that forms a not too stable picture of the economy. The mere presence of only a limited supply pushes prices up, and it may cause instability for the economy of Japan.
At the Bank of Japan, however, they are still not ready to take action on expanding the economic stimulus measures - at least for the immediate future. Markets were expecting a more specific statement, remembering that in April the rate of sales tax was increased. The reaction of the economy will be immediate; there is reason to expect a deceleration of GDP. However, the regulator has taken a pause in the statements for additional mitigation measures to observe the objective reactions. At the moment the volume of injections into the economy of Japan is 60-70 trillion yen annually.
Despite the apparent neutrality of the text of the protocol document, it became another reason for the growth of the yen - if the will not be an increase in stimulations, then, JPY will strengthen. An expensive yen with however damage export revenues.
Whilst the USD/JPY pair has a goal to fall to 101.20/101.00, it is unlikely to fall further.
RoboForex Analytical Department
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Forecasts presented in this section only reflect the author’s private opinion and should not be considered as guidance for trading. RoboForex bears no responsibility for trading results based on trading recommendations described in these analytical reviews.