Investing.com - The U.S. dollar came off nine-month highs against the yen on Friday amid profit taking ahead of Japanese elections on Sunday, but expectations for more aggressive easing by the Bank of Japan remained intact.
USD/JPY hit 83.95 on Friday, the pair’s highest since March 21; the pair subsequently consolidated at 83.49 by close of trade, 1.17% higher for the week.
The pair is likely to find support at 82.47, the low of December 12 and resistance at 83.95, Friday’s high.
The yen pared losses against the dollar ahead of Japanese general elections on Sunday, which are expected to result in growing political pressure on the BoJ to step up monetary stimulus measures.
Japanese opposition leader Shinzo Abe, who is widely expected to become the new prime minister, has called for more easing by the BoJ in order to spur growth.
Meanwhile, weak U.S. inflation data warranted continued monetary easing by the Federal Reserve.
Official data showed that U.S. consumer inflation fell 0.3% in November, down for the first time in six months on the back of lower gasoline prices, bringing the annualized rate of inflation to 1.8%.
The Federal Reserve said Wednesday that interest rates would remain close to zero as long as inflation forecasts remain near the bank’s 2% target and until the U.S. unemployment rate declines to 6.5% or less.
The U.S. central bank also said it would continue to purchase USD85 billion a month of government bonds and mortgage based securities in order to shore up the economic recovery.
Investor focus shifted back to negotiations to avoid the U.S. fiscal cliff following the central bank announcement, amid concerns that the automatic tax hikes and spending cuts due to take effect on January 1st could derail the U.S. recovery.
In the week ahead, investors will be continuing to monitor the progress on talks in Washington on the fiscal cliff. Market participants will also be awaiting election results in Japan as well as the outcome of Thursday’s BoJ policy setting meeting.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
Monday, December 17
The U.S. is to publish official data on manufacturing activity in New York State, a leading indicator of economic health, as well as a report on the balance of domestic and foreign investment in U.S. securities.
Tuesday, December 18
The U.S. is to produce government data on the current account.
Wednesday, December 19
Japan is to release official data on the trade balance, the difference in value between imports and exports.
The U.S. is to publish government data on building permits, an excellent gauge of future construction activity, as well as data on housing starts. The country is also to release official data on crude oil stockpiles.
Thursday, December 20
The Bank of Japan is to announce its benchmark interest rate. The rate announcement is to be accompanied by the bank’s rate statement, which contains important insights into current and future economic conditions from the bank’s perspective and will be followed by a press conference.
The U.S. is to release the weekly report on initial jobless claims, as well as revised data on third quarter growth and a report on manufacturing activity in Philadelphia. In addition, the U.S. is to publish industry data on existing home sales, a leading indicator of economic health.
Friday, December 21
The U.S. is to round up the week with revised data on consumer sentiment from the University of Michigan, as well as government data on personal income and spending.
USD/JPY hit 83.95 on Friday, the pair’s highest since March 21; the pair subsequently consolidated at 83.49 by close of trade, 1.17% higher for the week.
The pair is likely to find support at 82.47, the low of December 12 and resistance at 83.95, Friday’s high.
The yen pared losses against the dollar ahead of Japanese general elections on Sunday, which are expected to result in growing political pressure on the BoJ to step up monetary stimulus measures.
Japanese opposition leader Shinzo Abe, who is widely expected to become the new prime minister, has called for more easing by the BoJ in order to spur growth.
Meanwhile, weak U.S. inflation data warranted continued monetary easing by the Federal Reserve.
Official data showed that U.S. consumer inflation fell 0.3% in November, down for the first time in six months on the back of lower gasoline prices, bringing the annualized rate of inflation to 1.8%.
The Federal Reserve said Wednesday that interest rates would remain close to zero as long as inflation forecasts remain near the bank’s 2% target and until the U.S. unemployment rate declines to 6.5% or less.
The U.S. central bank also said it would continue to purchase USD85 billion a month of government bonds and mortgage based securities in order to shore up the economic recovery.
Investor focus shifted back to negotiations to avoid the U.S. fiscal cliff following the central bank announcement, amid concerns that the automatic tax hikes and spending cuts due to take effect on January 1st could derail the U.S. recovery.
In the week ahead, investors will be continuing to monitor the progress on talks in Washington on the fiscal cliff. Market participants will also be awaiting election results in Japan as well as the outcome of Thursday’s BoJ policy setting meeting.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
Monday, December 17
The U.S. is to publish official data on manufacturing activity in New York State, a leading indicator of economic health, as well as a report on the balance of domestic and foreign investment in U.S. securities.
Tuesday, December 18
The U.S. is to produce government data on the current account.
Wednesday, December 19
Japan is to release official data on the trade balance, the difference in value between imports and exports.
The U.S. is to publish government data on building permits, an excellent gauge of future construction activity, as well as data on housing starts. The country is also to release official data on crude oil stockpiles.
Thursday, December 20
The Bank of Japan is to announce its benchmark interest rate. The rate announcement is to be accompanied by the bank’s rate statement, which contains important insights into current and future economic conditions from the bank’s perspective and will be followed by a press conference.
The U.S. is to release the weekly report on initial jobless claims, as well as revised data on third quarter growth and a report on manufacturing activity in Philadelphia. In addition, the U.S. is to publish industry data on existing home sales, a leading indicator of economic health.
Friday, December 21
The U.S. is to round up the week with revised data on consumer sentiment from the University of Michigan, as well as government data on personal income and spending.