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JPY Safe Heaven Status will be Short Lived

July 8, 2015

JPY @ 121.50 – BINGO

As UK prepares for budget, Chancellor was quoted as saying that if the country is not in control of borrowing, borrowing takes control of the country. This was probably quoted with reference to Greece’s current situation, which is 1.3 pct of the European market is still a matter of great concern.
By Sunday, Greece is required to submit a comprehensive proposal with commitment to take action through its parliament to obtain financing. Hence, it would not be wrong to anticipate that the hint of fate of Greece could be known by the end of next week or by early next week. What hinders is that if Greece is able to dictate its terms it might open gates for unforeseen trouble as others in the region may reappear with debt renegotiation demand.
Though chances of reaching deal is 50:50, as the debt battle since last 5-years have reached the peak and hence, both are aware of the price of Grexit.
Meanwhile, on June 01, I made a “JPY Forecast Until December 2015”  both are available on Linkedin & Blog below.
In my comments I wrote a small note Japanese Yen next move, which was on target. Japanese Yen, held 126.20 well after hitting 125.85 and now testing my given resistance levels of around 121.20-50 zones. Economic recovery in Japan is still murky. The risk of economic contraction is looming. Inflation is almost flat. Suggesting continuation of BOJ’s ultra easing policy.
Therefore, the current strength of JPY will be short lived, as it is enjoying safe haven status.Break of 121.20 is required for 119.20. But key resistance level 118.10 should hold as it JPY is likely to loose its gloss, but needs to ease beyond 126.20 to attain my yearly taret of 129.50

Japanese Yen Forecast Until December 2015

Jun 1, 2015

JPY 124.90 = Today we saw perfect hit of my yearly target 124.80, Business Recorder Jan 2, 2015 ( ). This is in line of my earlier forecast, as I said in my brief note that Japan is struggling to come out of recession. Impact of sales tax imposed last year was one of the causes of drag in Japan’s economy.

Presently shift in market behavior is visible, as funds did not move out of Japan and Japanese investors look more confident.  Capital spending is strong as data suggest that growth in corporate capital is at fastest pace (January-March), signaling economic growth will accelerate. Manufacturing sector is also on the up-move.

But there are few risks in the month of June because of few important events. Greece, OPEC and US Non-farm Payroll data could lead to increased volatility. Japan purchases over 90 pct of its oil from international market, with falling oil prices Japanese economy can get good lift.

If Japan’s economy is unable to make further gains, more stimulus package cannot be ruled out and hence, another round of quantitative easing should not be a big surprise.

However, view on Japanese economy remains unchanged, as exports in coming months are likely to pick up at a faster pace. Outlook is still looking good and therefore, overall outcome by year end should be positive.

Technically, there is a minor risk for more gains as JPY needs to break 126.20 for test of 129.50 zones. But suspect before reaching the bottom Japanese currency should make correction. 121.20-50 is level to watch that should hold for another downside rally or else sharp gain towards 119.10 is possible. Top and bottom for the rest of the year is 129.50 – 117.10.

January 02, 2015

JPY @ 119.60 = After Japan’s early election and Shinzo Abe’s win, Abenomics strategy of record purchase of assets (QE) is likely to stay. As promised by Shinzo government, taxes will remain low. Though Japan is still struggling to come out of recession, despite all odds, unemployment rate is at low of 3.5 percent. Unlike past shift in domestic market behaviour is visible, as flow of funds is not moving out of Japan. Domestic investors have more confidence in Japanese economy. Further, corporate governance reforms will translate into better capital efficiency. For Japan that imports bulk of its oil, with falling oil prices its economy will get boost and in combination with weak Yen policy, Japanese exports should pick up at a faster pace. Therefore, outlook looks good and hence, Japans economy should provide positive results in later part of the year. JPY could overcome its weakness in coming months. Break of 122.80 is required for a final round of its next up-move towards 124.80. It has strong resistance at 114.80-50 zones break will confirm further gains towards 110-12 zones.

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