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IMF Predicts Japan's Economy will Grow by 1.3% this Year

4/10/2023 11:15 AM

The USD/JPY pair shows moderate growth, developing the corrective momentum formed last week. The instrument is testing the level of 132.70 for a breakout, receiving support from technical factors, as well as the March report on the US labor market, published last Friday.

Nonfarm Payrolls increased by 236.0 thousand after an increase of 326.0 thousand a month earlier. The real dynamics turned out to be very close to the forecasts of 240.0 thousand. At the same time, the Unemployment Rate fell from 3.6% to 3.5%, while investors did not expect any changes. Against this background, the US Federal Reserve at the May meeting may be inclined to further increase the interest rate. At the moment, more than 60% of analysts predict an increase in the cost of borrowing by 25 basis points.

Despite high inflation, experts from the International Monetary Fund (IMF) expect Japan's economy to grow by 1.3% this year on the back of increased consumer demand and the availability of financial savings from the population accumulated during quarantine. In turn, the rapid dynamics of consumer prices is associated primarily with external factors, including the consequences of the pandemic, the Russian-Ukrainian military conflict and the cost of raw materials.

Friday statistics from Japan turned out to be moderately optimistic. Labor Cash Earnings added 1.1% in February after rising by 0.8% in the previous month, while analysts had expected 1.4%. Overall Household Spending increased by 1.6% after declining by 0.3% a month earlier, against the forecast of 4.3%. The Coincident Index rose from 96.4 points to 99.2 points, and the Leading Economic Index increased from 96.6 points to 97.7 points.

Bollinger Bands in D1 chart demonstrate flat dynamics. The price range is almost constant, remaining rather spacious for the current level of activity in the market. MACD is growing preserving a weak buy signal (located above the signal line). Stochastic shows similar dynamics, reversing upwards near the level of "20". At the moment, the indicator is located approximately in the center of its area.

Resistance levels: 133.00, 133.74, 134.54, 135.57. | Support levels: 132.00, 131.00, 130.00, 129.62.

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