Forex - USD/JPY weekly outlook: June 3 - 7

Investing.com - The dollar ended the week at a three-week low against the yen on Friday, amid speculation that the Federal Reserve will scale back its asset purchase program in the coming months.

USD/JPY hit session lows of 100.21 Friday, the weakest level since May 9, before paring back losses to settle at 100.45, down 0.31% for the day and extending the week’s losses to 0.55%.

The pair is likely to find support at 99.85, the low of April 13, 20090 and resistance at 101.27, Friday’s high.

The University of Michigan said its consumer sentiment index rose to 84.5 in May, its highest level since July 2007, from76.4 in April and up from a preliminary estimate of 83.7.

A separate report showed that manufacturing activity in the Chicago-area improved at the fastest pace in over a year last month.

Market research group Kingsbury International said its Chicago purchasing managers’ index jumped to a seasonally adjusted 58.7 in May from a reading of 49.0 in April. Analysts expected a reading of 50.3

The robust data bolstered expectations that the Federal Reserve could begin to scale back its USD85 billion a month asset purchase program this year.

Meanwhile, the International Monetary Fund said Friday it fully endorses the Bank of Japan’s moves to spur consumer prices to 2% inflation through “sweeping enhancements” to its monetary-policy framework.

“So long as monetary easing pursues domestic goals, and is accompanied by comprehensive fiscal and structural reforms, we don’t see the yen’s current depreciation as problematic,” the fund said.

In the week ahead, investors will be awaiting the release of Friday’s closely watched report on U.S. nonfarm payrolls for further hints regarding the direction of U.S. monetary policy.

Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.

Monday, June 3

Japan is to release official data on capital spending.

Later in the day, the Institute of Supply Management is to release data on manufacturing activity in the U.S., a leading indicator of economic health.

Tuesday, June 4

Japan is to publish government data on average cash earnings, which is closely linked to consumer spending.

Meanwhile, the U.S. is to release data on the trade balance, the difference in value between imports and exports.

Wednesday, June 5

The U.S. is to release the ADP nonfarm payrolls report on private sector job creation, as well as government data on factory orders and crude oil stockpiles.

In addition, the Institute of Supply Management is release data on U.S. service sector activity, a leading economic indicator.

Thursday, June 6

The U.S. is to release the weekly government report on initial jobless claims.

Friday, June 7

The U.S. is to round up the week with closely watched government data on nonfarm payrolls and the unemployment rate, as well as data on average hourly earnings.

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