Yen May Fall to 95-100 per Dollar - 28.12.2012

Friday, the last trading day of the year, the yen was under pressure again, falling to the lowest level since March 2010 vs. US dollar. The USDJPY currency pair reached 86.62 during this morning trading (see the chart). According to Reuters, one of the prime minister’s advisers, Shinzo Abe confirmed that the central bank should raise the target inflation rate for price increases at 2% to 3%, the government should provide a higher level of reports on its tasks. The weakening of the yen to 95-100 per dollar would be an indicator of the monetary policy effectiveness, the adviser said. USDJPY, daily chart The macro economic data from Japan was released today, according to it, the deflation still observed in the country as same as significant reduction in manufacturing activity. The consumer price index fell in November by 0.2% yoy (see the chart), while the base CPI, which excludes food and energy fell by 0.5%. The index of industrial production fell by 5.8%, showing the result much worse than it was expected. Japan, CPI The US dollar fell slightly vs. the most liquid currencies this morning. According to reports the US President, Barack Obama will continue talks with the party leaders, aimed at avoiding "fiscal cliff," though hope that the parties can come to an agreement before January 1st is misty. However, even partial compromise, showing that the parties come to the agreement, would allow calming the markets down for a while. For today, the US dollar index has stabilized around 79.65 (see the chart). The US dollar index, daily chart