Japan’s GDP Annualized report

USDJPY Key event – Japan’s GDP Annualized report (May 18th 02:50 GMT +3)

Last week several important economic reports came from Japan: BOJ’s Bank Lending report, the Index of Leading Economic Indicators and Average Cash Earnings (YoY). All of the findings point to the conclusion that the latest Japanese monetary policy changes are bringing good results and further strengthening of the economy is quite possible.

The biggest economic problem in Japan is low inflation. As soon as this issue is solved – GDP will start to increase as well. Latest economic data is showing a very good (especially CPI related) dynamic. For example, “Bank Lending” was more than 10% higher compared to the expectations:

..Average Cash Lending – actual results were twice higher than the forecast:

..another quite important economic report is “Lending Index” which shows the overall economic situation in the economy (the higher it is, the better):

..and a 10-Year JGB Auction was much better compared to the previous time:

So, it is expected that the preliminary GDP data will be much better as well:

..and if the actual data is as good as the expectations – it will have a positive impact on Japanese Yen.

USDJPY chart:

It is much better to take the lines of support and resistance into the consideration at the moment, cause fundamental factors prevail, as Bank of Japan is using the current situation to take some unpopular decisions which will have a negative impact on JPY in a short-term, but on the other hand they make it possible to solve a lot of economic problems in a long-term.

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