Investing.com - The dollar scaled five year peaks against the yen on Friday, boosted by expectations that the Federal Reserve could make a small cut to its asset purchase program at its upcoming policy meeting this week.
USD/JPY rose to 103.92, the highest level since October 2008, before pulling back to 103.19, ending the session 0.15% lower.
The pair is likely to find support at 102.80, the low of December 9 and resistance at 104.00.
Expectations for a small reduction in the pace of the Fed’s USD85 billion-a-month asset purchase program at its upcoming policy meeting were boosted after stronger-than-forecast U.S. retail sales data for November released on Thursday added to signs that the economic recovery is deepening.
An agreement on a two-year U.S. budget deal was also seen as removing an obstacle to the winding back of monetary stimulus.
The dollar came off highs as investors locked in profits, while data showing that U.S. producer price inflation fell 0.1% in November sparked concerns over the sluggish inflation outlook.
The soft inflation data did little to alter expectations that the Fed will begin withdrawing stimulus in the next few months after the latest U.S. nonfarm payrolls report showed that the U.S. economy added more jobs than expected in November.
The yen remained under heavy pressure on the view that the Bank of Japan will have to increase the size of its asset-purchase program in the coming year in order to meet its target of 2% inflation by 2015.
The euro also climbed to five year highs against the yen on Friday, with EUR/JPY rising to 142.83, the strongest level since October 2008, and was last down 0.27% to 141.81.
In the week ahead, investors will be focusing on Wednesday’s outcome of the Fed’s monthly policy meeting, and a press conference with Chairman Ben Bernanke will be closely watched. Meanwhile, the BoJ is to hold what will be its final policy meeting of the year.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
Monday, December 16
Japan is to release data on manufacturing and service sector activity.
The U.S. is to release reports on industrial production, manufacturing activity in the New York region and the balance of foreign and domestic investment in U.S. securities.
Tuesday, December 17
The U.S. is to release data on consumer inflation and the current account.
Wednesday, December 18
Japan is to release data on the trade balance, the difference in value between imports and exports.
The U.S. is to release data on building permits, a leading indicator of future construction activity, and housing starts.
The Federal Reserve is to announce its federal funds rate and publish its rate statement, which outlines economic conditions and the factors affecting the monetary policy decision. The U.S. central bank is also to publish its economic projections for the next two years. The rate announcement is to be followed by a press conference with Chairman Ben Bernanke.
Thursday, December 19
The U.S. is to publish data on existing home sales, manufacturing activity in the Philadelphia region and initial jobless claims.
Friday, December 20
The BoJ is to announce its benchmark interest rate and publish its monetary policy statement, which outlines economic conditions and the factors affecting the bank’s decision. The announcement is to be followed by a press conference.
The U.S. is to round up the week with revised data on third quarter GDP.
USD/JPY rose to 103.92, the highest level since October 2008, before pulling back to 103.19, ending the session 0.15% lower.
The pair is likely to find support at 102.80, the low of December 9 and resistance at 104.00.
Expectations for a small reduction in the pace of the Fed’s USD85 billion-a-month asset purchase program at its upcoming policy meeting were boosted after stronger-than-forecast U.S. retail sales data for November released on Thursday added to signs that the economic recovery is deepening.
An agreement on a two-year U.S. budget deal was also seen as removing an obstacle to the winding back of monetary stimulus.
The dollar came off highs as investors locked in profits, while data showing that U.S. producer price inflation fell 0.1% in November sparked concerns over the sluggish inflation outlook.
The soft inflation data did little to alter expectations that the Fed will begin withdrawing stimulus in the next few months after the latest U.S. nonfarm payrolls report showed that the U.S. economy added more jobs than expected in November.
The yen remained under heavy pressure on the view that the Bank of Japan will have to increase the size of its asset-purchase program in the coming year in order to meet its target of 2% inflation by 2015.
The euro also climbed to five year highs against the yen on Friday, with EUR/JPY rising to 142.83, the strongest level since October 2008, and was last down 0.27% to 141.81.
In the week ahead, investors will be focusing on Wednesday’s outcome of the Fed’s monthly policy meeting, and a press conference with Chairman Ben Bernanke will be closely watched. Meanwhile, the BoJ is to hold what will be its final policy meeting of the year.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
Monday, December 16
Japan is to release data on manufacturing and service sector activity.
The U.S. is to release reports on industrial production, manufacturing activity in the New York region and the balance of foreign and domestic investment in U.S. securities.
Tuesday, December 17
The U.S. is to release data on consumer inflation and the current account.
Wednesday, December 18
Japan is to release data on the trade balance, the difference in value between imports and exports.
The U.S. is to release data on building permits, a leading indicator of future construction activity, and housing starts.
The Federal Reserve is to announce its federal funds rate and publish its rate statement, which outlines economic conditions and the factors affecting the monetary policy decision. The U.S. central bank is also to publish its economic projections for the next two years. The rate announcement is to be followed by a press conference with Chairman Ben Bernanke.
Thursday, December 19
The U.S. is to publish data on existing home sales, manufacturing activity in the Philadelphia region and initial jobless claims.
Friday, December 20
The BoJ is to announce its benchmark interest rate and publish its monetary policy statement, which outlines economic conditions and the factors affecting the bank’s decision. The announcement is to be followed by a press conference.
The U.S. is to round up the week with revised data on third quarter GDP.