Investing.com - The U.S. dollar fell to a two-week low against the yen on Wednesday, amid speculation that the Federal Reserve may announce further easing measures in the minutes of its latest policy meeting, while euro zone debt concerns supported the safe haven yen.
USD/JPY hit 79.14 during European afternoon trade, the pair’s lowest since June 29; the pair subsequently consolidated at 79.21, shedding 0.28%.
The pair was likely to find support at 78.78, the low of June 20 and resistance at 79.58, Tuesday’s high.
Market sentiment remained under pressure after Germany’s Constitutional Court delayed on Tuesday its decision on whether the euro zone's bailout fund, the European Stability Mechanism, is compatible with German law.
Without German backing, the ESM, which was originally meant to start on July 1, then delayed to July 9, cannot come into effect.
Meanwhile, Spanish Prime Minister Mariano Rajoy announced EUR65 billion of new austerity measures, in an effort to meet new budget-deficit targets agreed with euro zone partners.
Market analysts warned that the fresh austerity measures were likely to drag Spain’s economy deeper in to a recession.
The fresh budget cuts come a day after the conclusion of the latest meeting of euro zone finance ministers.
While the ministers agreed to grant Spain an extra year through 2014 to reach its deficit reduction targets, they did not come up with a final figure for aid for the country's ailing banks but said some EUR30 billion would be available by the end of this month.
Demand for the yen also remained supported amid growing expectations that the Bank of Japan will hold back from announcing more monetary easing at this week’s policy meeting.
Elsewhere, the yen was higher against the euro with EUR/JPY falling 0.17%, to hit 97.13.
Also Wednesday, official data showed earlier that the U.S. trade deficit narrowed to USD48.7 billion in May from deficit of USD50.6 billion in April, whose figure was revised from a deficit of USD50.1 billion.
Analysts had expected the U.S. trade deficit to narrow to USD48.5 billion.
Later in the day, the U.S. was to release official data on crude oil stockpiles, followed by the minutes of the Federal Reserve’s June policy-setting meeting.
USD/JPY hit 79.14 during European afternoon trade, the pair’s lowest since June 29; the pair subsequently consolidated at 79.21, shedding 0.28%.
The pair was likely to find support at 78.78, the low of June 20 and resistance at 79.58, Tuesday’s high.
Market sentiment remained under pressure after Germany’s Constitutional Court delayed on Tuesday its decision on whether the euro zone's bailout fund, the European Stability Mechanism, is compatible with German law.
Without German backing, the ESM, which was originally meant to start on July 1, then delayed to July 9, cannot come into effect.
Meanwhile, Spanish Prime Minister Mariano Rajoy announced EUR65 billion of new austerity measures, in an effort to meet new budget-deficit targets agreed with euro zone partners.
Market analysts warned that the fresh austerity measures were likely to drag Spain’s economy deeper in to a recession.
The fresh budget cuts come a day after the conclusion of the latest meeting of euro zone finance ministers.
While the ministers agreed to grant Spain an extra year through 2014 to reach its deficit reduction targets, they did not come up with a final figure for aid for the country's ailing banks but said some EUR30 billion would be available by the end of this month.
Demand for the yen also remained supported amid growing expectations that the Bank of Japan will hold back from announcing more monetary easing at this week’s policy meeting.
Elsewhere, the yen was higher against the euro with EUR/JPY falling 0.17%, to hit 97.13.
Also Wednesday, official data showed earlier that the U.S. trade deficit narrowed to USD48.7 billion in May from deficit of USD50.6 billion in April, whose figure was revised from a deficit of USD50.1 billion.
Analysts had expected the U.S. trade deficit to narrow to USD48.5 billion.
Later in the day, the U.S. was to release official data on crude oil stockpiles, followed by the minutes of the Federal Reserve’s June policy-setting meeting.