The Yen strengthened too much. Overview for 19.02.2018

19.02.2018

On Monday morning, USDJPY is trying to reach stability, but the Japanese currency has already grown too much.

The Japanese Yen is reaching stability against the USD at the beginning of another February week. The current quote for the instrument is 106.47. The Yen stopped rising for a while, but the rally might as well continue.

According to the Reuters Tankan Index report published today, the indicator plummeted a lot in February, which may be very negative for the strong Yen. The report covers 544 companies, half of which provide their opinions anonymously. The results showed that the indicator fell from 35 points in January to 29 points in February. Expectations about possible March readings are quite conservative so far: the indicator may increase up to 30 points.

We’d like to remind that both Tankan indices calculated by the Bank of Japan were close to their multiyear highs in January. The BoJ’s indicator reached the highest level over the last 11 years and provided boosted the country’s economy thanks to the excellent external demand and good numbers of companies’ profit.

At the moment, it may be rather doubtful that companies will be able to keep the profit numbers at least the way they are now. The expensive national currency puts a lot of pressure on the profit, thus reducing it. In addition to that, it may influence consumers as well and they may try to decrease their expenses as much as possible. All these factors are no good news for the Japanese GDP.  

 

RoboForex Analytical Department

 

Attention!

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.