The vision on the yen seems to get a different twist

The Japanese yen case has heavily returned into the market participants’ attention. It seems that the recent message of the advisor Hamada was misunderstood: its specifications show that talking about the weaknesses of the yen, he actually refers to the PPP (purchasing power parity, resulting from considering the relative purchasing power of the two economies concerned) and not to the spot value (visible in the trading platforms).

The USDJPY may stabilize as soon as the disappointing trade, production and activity of small business data in the US get absorbed in by the price. Currently, USDJPY is trading in the 119.60 area where 118.70 works as the current support and 120.35 holds the resistance.

Speaking about the EURJPY, things seem to lean in favor of the yen, which is seen as a safer investment for capital. Here, the descending trend may have all the necessary ingredients in order to continue. Actual support is at 126.10 and resistance at 127.80.

The value of the GDP for the first quarter of this year met expectations in China, advancing only 7%. The real disappointment came from the Industrial Production which fell to 5.6%, Fixed Asset Investment reported down to 13.5%, Retail Sales were weaker than expected, reported at 10.2% and the Trade Balance went down to the 3.1 billion threshold. Maybe the economy needs more time to absorb the already relaxed home-purchasing rules, the interest rates cut twice and the reduced reserves for banks.

The Australian and New Zealand dollar did not have a strong reaction as weak data on China was broadly expected, but the effects may be seen over the time.

The British pound, partially recovered ground in the previous session as the CPI was reported in line with the expectations at 0.0%. Aside from the PPI Input, which rose to 0.3%, the remaining indicators were weak: RPI down to 0.9%, Core CPI down to 1%, HPI down to 7.2% and PPI Output at 0.2%. The pound enjoyed the moment as the economy is seriously risking to sink into deflation soon. Grim scenarios are already outlined for the UK economy as the elections on 7^th of May are shifting leaders’ attention towards political matters instead of acting on economic issues.

The American dollar recently depreciated as the Core Retail Sales dropped to 0.4%, the Retail Sales decreased to 0.9% and the PPI was reported down to 0.2%. These data confirmed the delay in the recovery of the consumption and creates suspense concerning the Advance GDP report of 29th of April. In addition, the American economy has to bear the burden of the already appreciated dollar (affecting the companies’ profits) and the low price of oil.

The euro outlook remains weak in the long term, but it could receive some support if today the ECB announces the Minimum Bid Rate in line with expectations at 0.05%. The Bank of Canada is also due to release the Overnight Rate and the expectations could be also met (0.75%), a fact that will give the Canadian dollar another breath.