Investing.com - The dollar rose to its highest level against the yen in six months on Friday as expectations that the Bank of Japan will have to step up its monetary stimulus program pressured the yen lower.
USD/JPY hit session highs of 102.61 on Friday, the highest level since May 23 and ended the session at 102.44. For the week, the pair was up 1.06%, the fifth consecutive weekly gain.
The pair was likely to find support at 101.92, Thursday’s low and resistance at 103.00.
The yen remained under heavy selling pressure amid heightened expectations that the BoJ will have to implement further stimulus measures in order to meet its target of 2% inflation by 2015.
On Wednesday, BoJ board member Sayuri Shirai raised doubts over whether the inflation target can be met because of downside risks to growth, adding that the bank was open to taking further steps if growth slows.
In contrast, demand for the dollar continued to be underpinned by expectations that the Federal Reserve will start to taper its USD85 billion-a-month asset purchase program at one of its next few meetings.
The yen slumped to almost five year lows against the euro, with EUR/JPY settling at 139.21, the highest level since June 2009. For the week, the pair jumped 1.46%.
The shared currency was boosted after data showed that the annual rate of inflation in the euro zone rose more-than-expected in November, easing concerns over further rate cuts by the European Central Bank.
Eurostat said the annual rate of consumer inflation rose by 0.9% in November, recovering from a four year low of 0.7% in October. Economists had forecast an annual increase of 0.8%.
Another report showed that the euro zone unemployment rate fell to 12.1% in October, down from 12.2% in September, the first fall since February 2011. However, the youth unemployment rate in the region rose to record high of 24.4% in October.
Sterling ended the week 2.32% higher against the ailing yen, with GBP/JPY settling at 167.74, the highest level since October 2008.
In the week ahead, investors will be focusing on Friday’s U.S. nonfarm payrolls report for November, for indications on the timing of a possible reduction in Fed stimulus. The U.S. is also to release revised data on third quarter growth.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets. The guide skips Tuesday as there are no relevant events on this day.
Monday, December 2
Japan is to publish data on capital spending, a leading indicator of economic health.
Federal Reserve Chairman Ben Bernanke is to speak at an event in Washington. Later Monday, the Institute of Supply Management is to release its manufacturing PMI.
Wednesday, December 4
The U.S. is to release the ADP report on private sector job creation, which leads the government’s nonfarm payrolls report by two days. The Institute of Supply Management is to release its services PMI. The U.S is also to publish data on new home sales and the trade balance, the difference in value between imports and exports.
Thursday, December 5
The U.S. is to publish a revised estimate of third quarter gross domestic product, the broadest indicator of economic activity and the leading indicator of economic growth. Meanwhile, the Labor Department is to release its weekly report on initial jobless claims. The U.S. is also to publish data on factory orders.
Friday, December 6
The University of Michigan is to release the preliminary reading of its consumer sentiment index. The U.S. is to round up the week with the closely watched government data on nonfarm payrolls and the unemployment rate.
USD/JPY hit session highs of 102.61 on Friday, the highest level since May 23 and ended the session at 102.44. For the week, the pair was up 1.06%, the fifth consecutive weekly gain.
The pair was likely to find support at 101.92, Thursday’s low and resistance at 103.00.
The yen remained under heavy selling pressure amid heightened expectations that the BoJ will have to implement further stimulus measures in order to meet its target of 2% inflation by 2015.
On Wednesday, BoJ board member Sayuri Shirai raised doubts over whether the inflation target can be met because of downside risks to growth, adding that the bank was open to taking further steps if growth slows.
In contrast, demand for the dollar continued to be underpinned by expectations that the Federal Reserve will start to taper its USD85 billion-a-month asset purchase program at one of its next few meetings.
The yen slumped to almost five year lows against the euro, with EUR/JPY settling at 139.21, the highest level since June 2009. For the week, the pair jumped 1.46%.
The shared currency was boosted after data showed that the annual rate of inflation in the euro zone rose more-than-expected in November, easing concerns over further rate cuts by the European Central Bank.
Eurostat said the annual rate of consumer inflation rose by 0.9% in November, recovering from a four year low of 0.7% in October. Economists had forecast an annual increase of 0.8%.
Another report showed that the euro zone unemployment rate fell to 12.1% in October, down from 12.2% in September, the first fall since February 2011. However, the youth unemployment rate in the region rose to record high of 24.4% in October.
Sterling ended the week 2.32% higher against the ailing yen, with GBP/JPY settling at 167.74, the highest level since October 2008.
In the week ahead, investors will be focusing on Friday’s U.S. nonfarm payrolls report for November, for indications on the timing of a possible reduction in Fed stimulus. The U.S. is also to release revised data on third quarter growth.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets. The guide skips Tuesday as there are no relevant events on this day.
Monday, December 2
Japan is to publish data on capital spending, a leading indicator of economic health.
Federal Reserve Chairman Ben Bernanke is to speak at an event in Washington. Later Monday, the Institute of Supply Management is to release its manufacturing PMI.
Wednesday, December 4
The U.S. is to release the ADP report on private sector job creation, which leads the government’s nonfarm payrolls report by two days. The Institute of Supply Management is to release its services PMI. The U.S is also to publish data on new home sales and the trade balance, the difference in value between imports and exports.
Thursday, December 5
The U.S. is to publish a revised estimate of third quarter gross domestic product, the broadest indicator of economic activity and the leading indicator of economic growth. Meanwhile, the Labor Department is to release its weekly report on initial jobless claims. The U.S. is also to publish data on factory orders.
Friday, December 6
The University of Michigan is to release the preliminary reading of its consumer sentiment index. The U.S. is to round up the week with the closely watched government data on nonfarm payrolls and the unemployment rate.