The Yen stopped attacking. Overview for 12.07.2021

USDJPY continues the correction after plunging earlier. 

The Japanese Yen is taking a break in its strengthening against the USD. The current quote for the instrument is 110.18.

The statistics published in the morning showed that the Core Machinery Orders added 7.8% m/m in May after expanding by 0.6% m/m in April and against the expected reading of 2.5% m/m. The report indicates that the domestic demand improved and if so, the country’s economy may count on it as another factor of support. 

Stimulus programs from the Japanese authorities and regulator will surely support an unstable recovery of the national economy but the recovery potential is rather weak. 

Those who criticize the Bank of Japan say that the regulator is barely free in making decisions on loosening the stimulus policy. Mostly due to the fact that the support program is too global and rigorous. One of the most important tasks of the Japanese regulator is a financial help for the country’s monetary policy. At the same time, the regulator must already start thinking about how to wind up this stimulus program because this process may take years. It will be very essential to continue maintaining the financing of the national debt at low costs and consider the inflation aspect, which may seem to be the most important one.  

The Bank of Japan is currently holding the major share of the country’s corporate bond market and most Japanese companies. It will require much effort to let the markets float freely.