Australian Dollar (a$) Against the Japanese Yen (¥) Four Month Forecast from 1st September to 31st December 2010

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Australian Dollar (A$) against the Japanese Yen (¥)
Four Month forecast from 1st September to 31st December 2010

Like the other currencies mentioned in the report, the Japanese Yen (¥) also adopts a floating exchange rate. As this is a short term forecast of the Australian Dollar (AUD) against the Japanese Yen (JPY), a chartist approach will be taken to analyse the movements of the two currencies. The technical method and the effects of the government are the topics that will be analysed for this short run forecast (Moffett et al, 2006 p.136). As of the 1st of September 2010 the Australian Dollar $1 = Y75.93.
Technical Method
The first step of the analysis will be using the technical method. The technical method skips the fundamental roles of the exchange rate which includes the inflation and interest rates and looks at the exchange rates past history to generate a forecast accordingly (Moosa, I 2010 p.239). According to the graph of the AUS against the Yen (Appendix 2A) it can be seen that the Yen has been running in a bull market (red line) from February to the start of May. This means the market has been running with an upward trend as three tops and bottoms have touched the link (Moosa, I 2010 p.242). A trend reversal has started appearing as the market goes into a bear market but then steadily picks up again to form an ascending triangle (blue line). The market has gone into an ascending triangle as buyers are willing to pay more for the currency.
The Yen has hit a 15 year high against the US dollar as it has a strong trend pushing it up. As Japan is a dependant on its big exporting scheme, having a strong currency can cause problems for them. If the currency is too strong then Japanese companies will lose profit or it will increase the price of goods. The Japanese government have threatened to buy Yen in the foreign exchange market to slow…...

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