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Forex - USD/JPY weekly outlook: July 16 - 20

Published 07/15/2012, 06:32 AM
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Investing.com - The U.S. dollar ended the week lower against the yen on Friday, as sustained concerns over the euro zone debt crisis boosted demand for safe haven assets.

USD/JPY hit 79.06 on Friday, the pair’s lowest since June 20; the pair subsequently consolidated at 79.17, down 0.52% on the week.

The pair is likely to find support at 78.78, the low of June 20 and resistance at 79.78, the high of July 11.

Investor sentiment was hit after ratings agency Moody’s downgraded Italy's sovereign debt rating late Thursday, citing doubts over the government’s ability to enact badly-needed reforms.

Despite the downgrade, Italy managed to successfully auction the maximum EUR 5.25 billion of two and five-year bonds on Friday, but the yield on the country’s 10-year bonds climbed above 6% following the auction.

Market sentiment was boosted Friday after data showed that China’s gross domestic product expanded 7.6% in the second quarter, in line with expectations.

The euro edged higher against the yen on Friday, with EUR/USD edging up 0.20% to 96.97, although the pair remained 0.80% lower on the week.

In the U.S., data on Friday showed that consumer confidence unexpectedly dropped to the lowest level in seven months in July.

The University of Michigan said its index of consumer sentiment fell to a seasonally adjusted 72.0, from 73.2 in June, confounding expectations for an increase to 73.4.

A separate report showed that U.S. producer price inflation ticked up 0.1% in July, against expectations for a 0.5% decline.

The data came after Wednesday’s minutes from the Federal Reserve’s June meeting showed that few policymakers believed more asset purchases would be necessary to support growth in the economy.

The Bank of Japan left interest rates unchanged following its policy meeting on Thursday.

The bank reaffirmed its commitment to steadily increasing the size of its asset-purchase program, but held back from announcing any immediate increase in the overall size of the program.

In the week ahead, investors will be focusing on testimony by Federal Reserve Chairman Ben Bernanke, amid speculation over the possibility of more quantitative easing from the central bank.

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 Friday, as there are no relevant events on this day.

Monday, July 16

Markets in Japan are to remain closed for a national holiday.

The U.S. is to publish official data on retail sales, the foremost indicator of consumer spending, which accounts for the majority of overall economic activity. The country is also to release official data on business inventories and manufacturing activity in New York.

Tuesday, July 17

The U.S. is to publish official data on consumer price inflation, as well as reports on the capacity utilization rate and industrial production. In addition, Federal Reserve Chairman Ben Bernanke is to testify on the on the bank’s monetary policy report before the Senate Banking Committee in Washington.

Wednesday, July 18

The BoJ is to release the minutes of its July policy meeting, which outline the reasons for the monetary policy decision and discuss the economic outlook.

The U.S. is to publish official data on building permits, an excellent gauge of future construction activity, as well as a report on housing starts. The country is also to release government data on crude oil stockpiles.

Meanwhile, Federal Reserve Chairman Ben Bernanke is to testify for a second day on the on the bank’s monetary policy report before the Senate Banking Committee in Washington.

Thursday, July 19

The U.S. is to publish government data on initial jobless claims, as well as reports on existing home sales and manufacturing activity in Philadelphia.


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