Investing.com - The dollar strengthened against the yen on Thursday as investors bet that data related to the U.S. housing sector to be released later will be strong enough to convince the Federal Reserve to stand down with plans to stimulate the economy.
In Asian trading on Thursday, USD/JPY was trading at 79.10 up 0.13%, up from a session low of 79.00 and off a high of 79.15.
The pair was likely to find support at 78.82, the low from July 17, and resistance at 79.15, the earlier high.
Later Thursday, the U.S. will release data on building permits and housing starts, which could provide good insight as to whether the Federal Reserve will stimulate the economy with monetary easing measures that weaken the dollar to spur recovery.
Mixed data has suggested the Fed may actually stand down or delay plans to intervene in the economy with stimulus.
U.S. industrial production outpaced expectations in July, climbing 0.6%, above forecasts for a 0.5% increase.
However, the Federal Reserve Bank of New York said earlier that its general business conditions index fell by 13.2 points to -5.8 in August from a reading of 7.4 in July.
Markets were expecting a 6.5 reading, which suggested that many American business owners remain uncertain over the country's future and are keeping capital spending and hiring at bay.
Inflation, meanwhile, did remain at bay last month.
Government data revealed that the U.S. consumer price index came in unchanged in July for the second consecutive month, compared to expectations for a 0.2% monthly rise, while core consumer prices, which exclude food and energy prices, rose 0.1%, less than the expected 0.2% increase.
The figures, however, came right in the heels of a U.S. Commerce Department report that retail sales jumped 0.8% in July after a 0.7% drop in June, shooting way past market expectations for a 0.3% increase.
It was the first gain in four months.
Core retail sales, which exclude automobiles, rose 0.8% in July, well above market calls for a 0.4% increase and up from a 0.8% decline in June.
Furthermore, yields in U.S. government bond markets have been rising, a sign investors may be leaving the safety of the U.S. Treasury in search of risk.
Talk the Federal Reserve may hold off on stimulating the economy with a new round of quantitative easing bolstered the dollar against other currencies.
The dollar weakens and stock prices rise when the Fed intervenes, and months of soft economic indicators have fueled market calls that the Fed will step in with quantitative easing.
Investors have been selling greenbacks and snapping up stocks in anticipation of Fed easing, yet stock indices may have risen to the point that the Fed will hold off intervening on the notion that anticipatory stock buying has already stimulated the economy in the same way actual intervention would.
Recently released minutes of the Bank of Japan’s latest policy meeting showed that board members weren’t ruling out any options to jolt the economy, including rolling out monetary easing measures, which kept the yen lower.
Very weak or very strong housing starts and building permits would provide the market with welcome clarity and more definitive steering currents.
The yen was down against the pound and down against the euro, with GBP/JPY up 0.13% and trading at 124.06 and EUR/JPY up 0.21% and trading at 97.29.
On top of releasing data on building permits and housing starts, the U.S. will publish weekly government data on unemployment claims.
The country is also to release a report on manufacturing activity in the Philadelphia area.
In Asian trading on Thursday, USD/JPY was trading at 79.10 up 0.13%, up from a session low of 79.00 and off a high of 79.15.
The pair was likely to find support at 78.82, the low from July 17, and resistance at 79.15, the earlier high.
Later Thursday, the U.S. will release data on building permits and housing starts, which could provide good insight as to whether the Federal Reserve will stimulate the economy with monetary easing measures that weaken the dollar to spur recovery.
Mixed data has suggested the Fed may actually stand down or delay plans to intervene in the economy with stimulus.
U.S. industrial production outpaced expectations in July, climbing 0.6%, above forecasts for a 0.5% increase.
However, the Federal Reserve Bank of New York said earlier that its general business conditions index fell by 13.2 points to -5.8 in August from a reading of 7.4 in July.
Markets were expecting a 6.5 reading, which suggested that many American business owners remain uncertain over the country's future and are keeping capital spending and hiring at bay.
Inflation, meanwhile, did remain at bay last month.
Government data revealed that the U.S. consumer price index came in unchanged in July for the second consecutive month, compared to expectations for a 0.2% monthly rise, while core consumer prices, which exclude food and energy prices, rose 0.1%, less than the expected 0.2% increase.
The figures, however, came right in the heels of a U.S. Commerce Department report that retail sales jumped 0.8% in July after a 0.7% drop in June, shooting way past market expectations for a 0.3% increase.
It was the first gain in four months.
Core retail sales, which exclude automobiles, rose 0.8% in July, well above market calls for a 0.4% increase and up from a 0.8% decline in June.
Furthermore, yields in U.S. government bond markets have been rising, a sign investors may be leaving the safety of the U.S. Treasury in search of risk.
Talk the Federal Reserve may hold off on stimulating the economy with a new round of quantitative easing bolstered the dollar against other currencies.
The dollar weakens and stock prices rise when the Fed intervenes, and months of soft economic indicators have fueled market calls that the Fed will step in with quantitative easing.
Investors have been selling greenbacks and snapping up stocks in anticipation of Fed easing, yet stock indices may have risen to the point that the Fed will hold off intervening on the notion that anticipatory stock buying has already stimulated the economy in the same way actual intervention would.
Recently released minutes of the Bank of Japan’s latest policy meeting showed that board members weren’t ruling out any options to jolt the economy, including rolling out monetary easing measures, which kept the yen lower.
Very weak or very strong housing starts and building permits would provide the market with welcome clarity and more definitive steering currents.
The yen was down against the pound and down against the euro, with GBP/JPY up 0.13% and trading at 124.06 and EUR/JPY up 0.21% and trading at 97.29.
On top of releasing data on building permits and housing starts, the U.S. will publish weekly government data on unemployment claims.
The country is also to release a report on manufacturing activity in the Philadelphia area.