The Prime Minister of Japan announced a sales tax hike form 5% up to 8% in April 2014. He also announced an intension to implement package of stimuli worth £¥5000bn in order to support the Japanese Yen while the tax reform is implemented.
Nomura analysts expect the sales tax increase to affect the real GDP, decreasing it by 0.64%. At the same time, they say the offered measures aimed at supporting the national economy will allow the Japanese government to make up for the decline (+0,55% to the real GDP). They also support Abe’s intension to cut the corporate tax since it is one of the highest corporate taxes in the Asian-Pacific region.
Forex
The long-awaited resolution of the tax issue failed to end the retracement of USDJPY. The currency pair is still forming a bearish wave - А/В of wave level Daily, Masterforex-V Academy reports.
A further decline (below the 95.80 low) will probably give way to 93.78. The current bearish move will be completed as soon as the price overcomes the top of the MF sloping channel and consolidates above 100.60 (as shown below). If this is the case, 100.86 and 101.52 will turn into the closest levels of resistance.
