Investing.com - The U.S. dollar edged higher against the yen on Friday after data showed that U.S. consumer sentiment rose to an almost eight-year high this month, underlining the view that the economic recovery is continuing to gain momentum.
USD/JPY edged up 0.08% to 118.77 in late trade, off lows of 118.05. The pair ended the week down 2.33%.
The preliminary reading of the University of Michigan's consumer sentiment index rose to 93.8, the highest level since January 2007 and ahead of forecasts of 89.7.
Consumer sentiment was boosted by the improving outlook for employment and wage growth and lower gasoline prices.
The data underpinned expectations for a hike in U.S. interest rates by the Federal Reserve next year.
The U.S. dollar index, which measures the greenback against a basket of six major currencies, recovered from session lows of 88.12 following the report to settle at 88.34, still off 0.26% for the day.
The dollar fell sharply against the yen earlier in the week, reversing a rally to Monday’s seven year highs of 121.83, as concerns over political uncertainty in Greece hit market sentiment, boosting demand for the traditional safe haven yen.
Investors were spooked by a surprise decision by the Greek government to bring forward a parliamentary vote for president to next week from February.
The move raised the prospect of snap elections if Prime Minister Antonis Samaras’ candidate is not approved by parliament, which could see the anti-bailout Syriza party take power.
Economic reports pointing to a slowdown in China and the ongoing decline in oil prices also fuelled risk aversion.
In the week ahead, investors will be awaiting the outcome of Wednesday’s Federal Reserve policy meeting for further clarification on when interest rates might start to rise.
Japan’s central bank is also to hold a policy setting meeting next week.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
Monday, December 15
Japan is to publish reports on the Tankan manufacturing and non-manufacturing index.
Later Monday, the U.S. is to release reports on manufacturing activity in the New York region and industrial production.
Tuesday, December 16
The U.S. is to publish reports on building permits and housing starts.
Wednesday, December 17
Japan is to publish a report on its trade balance.
The U.S. is to release data on consumer inflation and the current account. Later Wednesday, the Federal Reserve is to publish its rate statement and economic projections for the next two years. Fed Chair Janet Yellen is to hold what will be a closely watched press conference.
Thursday, December 18
The U.S. is to release data on initial jobless claims and manufacturing activity in the Philadelphia region.
Friday, December 19
The Bank of Japan is to announce its benchmark interest rate and publish its rate statement, which outlines economic conditions and the factors affecting the monetary policy decision. The bank will hold a press conference following the announcement.