Another 10 trillions yen have been added today to BOJ assets purchasing plan to worth 101 trillions currently after it had ended its 2 days meeting few minutes ago.
As this action was widely expected anyway, after The LDP party outstanding victory in Japanese lower house by 294 seats and its allied party Kometo by 31 seats last Sunday, Nikkie did not react positively as it is not under the pressure of the dovish US session closing and red future of the US indexes currently but it is still holding above the 10.000 psychological level while USDJPY came lower than 84 figure before it could rebound again whereas it was before the decision at 84.20 waiting for Shirakawa’s press conference.
However hawkish talking about pursuing the inflation targets which have been placed of last February can put the Japanese yen under pressure as BOJ has chosen 1% to be its short term inflation target and 2% yearly to be for the long term but it had not seen a positive yearly rate since last June.
From another side, the market is anxiously waiting for hearing comments from the new government about the Japanese yen and its impact on the Japanese exports competitivity at these level as Japan have not had also positive yearly rate of its exports since last June recording 10.3% yearly declining last September as the highest falling of them since March 2011 earthquake before easing to -6.5% in October and -4.1% in November as we have seen earlier this week while the global economy is contained by the fiscal cliff negative impact and the weak economic performance in EU.
The markets are also waiting to know whether or not it will issue directly a new stimulating plan can hurt its creditability for stimulating plan to boost the economy which is still facing persisting deflation problem or not taking wait and see stance of the current working package of the previous government and the easing monetary policy impacts.
From the other side, the Japanese yen can be buoyed by the worries about the fiscal cliff in US as a risk haven option while the eyes turning to US Congress voting on a back up deal for lowering the severeness of the US fiscal cliff.
After USDJPY had had the ability to get over its previous resistance at 84.17 in the beginning of this week reaching 84.32, God willing, it can face in its ascending was another resistance at 85 psychological level which can be followed by 85.51 before higher resisting levels at 88.1 , 89.14 . 90 psychological level, 92.87 and 94.97 which has been the formed top on the 4th of may 2010 while easing back from here can be met by supporting levels at 83.23, 82.1, 81.68, 80.87, 80 psychological level, 79.06, 77.93 and 77.10 whereas it’s formed its bottom on 13th September this year to these current levels on the BOJ last stimulating efforts in last September.
FX Market Strategist
Walid Salah El Din
Mob: +20 12 2465 9143
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