Japanese media report that the Bank of Japan has decided to expand its asset purchase program. This move was made within the scope of the plan designed in order to strengthen the stimuli aimed at backing the domestic economic growth. According to Market Leader experts, this was an unexpected step for most traders and investors. Still, the market reacted with a rapid rally.
The Bank of Japan is planning to expand its money supply by 80 trillion yens or 733.5 billion dollars relative to the previous target set at 60-70 trillion yens. As the result of this decision, the Topix index gained 4% along with some other markets.
As you can see, the Bank of Japan is also trying to fight deflation as the rate of inflation is going down as the result of a decline in consumer demand followed by the recent sales tax hike in April 2014 along with lower crude oil prices.
At the same time, Haruhiko Kuroda presiding over the Bank of Japan gives us a pretty optimistic forecast. According to the forecast, the inflation target of 2% is going to be hit in the next financial year, which is to start in April 2015. At the same time, Mr. Kuroda promises that the central bankers and politicians will get down to discussing an exit from the stimulation program in early 2015.
Still, some central bankers do not share Kuroda’s optimism regarding the inflation target. The do not believe that the target may be reach within the next 2 years and are currently promoting the idea of abandoning the vain attempts to reach it. Indeed, the rate of inflation in Japan is slowing down. As of September 2014, consumer prices were down. The overall inflation index dropped from 3.3% down to 3.2% m/m n September. Still, the Bank of Japan reports that the current inflation rate is some 1%, way below the 2% target.
Forex
According to Masterforex-V Academy, a reputable coaching site when it comes to Forex and other financial markets, helps Market Leader to define the current picture in the market of USDJY in order to be able to outline the near-term prospects of the currency pair.
The experts report that the price has been going up within the scope of the long-term rally for days. The Japanese Yen is going down in value while the US Dollar is going in the opposite direction, thereby showing strength. At this point, the price is up and close to 115,58. The closest major level of resistance to watch is 117,75.
