Economic news
The yen falls, following China’s strong PMI data
The Japanese currency continues to be in the spotlight on the Forex markets and the country’s new government is taking various steps in its efforts to tackle the economic problems facing Japan.
After its initial gains this week, the yen lost against its major currency counterparts on Thursday’s early trading, after the Bank of Japan’s new monetary-easing measures disappointed some investors’ expectations. Further weakening of the yen came after the release of strong Chinese PMI data as the actual figures of 51.9 are signaling expansion of China’s economy. The positive results, though, were overshadowed by North Korea’s threat for a nuclear test, which added uncertainty to the geopolitical situation in the region and depressed currency demand.
The yen has slipped against the dollar and was trading at 89.51 at the time of writing, down 0.3% from its opening price of 88.60.
Additional worrying data came from Japan, as the country published a record-high trade deficit of 6.9tn yen ($78bn; £49bn) for 2012. This is a second consecutive year of trade deficit for the country, after more than 30 years of surpluses. Japanese exports to Europe and China are plummeting while imports are increasing, mainly because of short domestic energy supplies.
However, analysts are not much concerned as, according to them, the deficit has reached its bottom end and is expected to contract significantly in the coming months.
Their expectations are further supported by the Japanese government’s firm determination to weaken the yen in order to boost exports.
Looking further in the day, the CPI is due to be released as well as the BoJ’s monetary policy meeting minutes, and both can affect the JPY volatility.
Technical analysis
USD/JPY
At yesterday’s session the dollar traded in the range of 88.05 – 88.75 JPY. This morning the currency pair was trading at 88.85 – 89.30.
If the dollar successfully overcomes the resistance zone of 89.30 – 89.55, the aim will be reaching and testing the 89.85-90.10 zone. If successful, the upward trend will continue to 90.30 – 90.50. If it falls below the support zone of 89.00 – 88.70, the next support zone will be at 88.55 – 88.40. In case of a breakdown, the downward trend will continue to 88.20 – 88.00.
Source: dfmarkets.co.uk
Disclaimer: The Content of these charts and analyses does not constitute any form of advice or recommendation by Delta Financial Markets to buy, sell (or refraining from making) any trade or investment. You may wish to seek independent advice before entering into transactions.
Delta Financial Markets shall not be held liable by you or any others for any decision made or action taken by you or others based upon reliance on or use of information or materials obtained or accessed through use of these technical analyses and charts. DF Markets assumes no responsibility for errors, inaccuracies or omissions in these materials, nor shall it be liable for damages arising out of any person’s reliance upon the information on this page. DF Markets shall not be liable for any special, indirect, incidental, or consequential damages.