XAGJPY Analysis: Japan’s GDP for the 1st quarter improved slightly in final reading

By IFCMarkets

Japan’s GDP for the 1st quarter improved slightly in the final reading

The fall of XAGJPY on the chart means that the yen is “stronger” than silver. At present, both silver (as a precious metal) and the Japanese yen are regarded by market participants as protective assets against a possible recession in the global economy. In particular, World Bank warns of such risks in its review. According to it, the global GDP by the end of 2020 may fall by 5.2% due to the Covid-19 pandemic. This will be the first time since 1960, when World Bank’s research began to be published. At the same time, the overall GDP of developed countries may collapse by 7%, and that of developing countries – by 2.5%. Against this pessimistic backdrop, Japan’s economic performance is not so bad yet. Japan’s GDP in the first quarter of 2020 in the final reading fell by only 2.2% in annual terms. The first edition of GDP was worse, since its decline was estimated at 3.4%. Sustainable economies typically support exchange rates. Silver, in turn, may be less attractive than gold. Global industry accounts for up to 40% of silver demand, which, like GDP, may be in stagnation due to the coronavirus. In contrast, gold is much more widely used for investment. Note that the outcome of the Fed’s 10 June meeting may have a significant impact on the dynamics of precious metals.

Summary of technical analysis

Market Analysis provided by IFCMarkets