Investing.com - The U.S. dollar trimmed some of last week’s strong gains against the yen on Friday, easing back from an 11-month high but the yen remained under pressure amid expectations for more stimulus from the Bank of Japan.
USD/JPY hit 84.17 on Wednesday, the pair’s highest since April 13, 2011; the pair subsequently consolidated at 83.42 by close of trade on Friday, jumping 1.1% over the week.
The pair is likely to find support at 82.87, the low of March 14 and resistance at 84.17, Wednesday’s high.
The dollar weakened against the yen on Friday, after the Department of Labor said consumer price inflation rose 0.4% in February, in line with expectations, fueled largely by pricier gasoline. Core inflation rates, which are stripped of volatile food and energy prices, rose 0.1%, below expectations for a gain of 0.2%.
The soft data fuelled speculation that the Federal Reserve could maintain a policy of economic stimulus, which would dilute the greenback.
Sentiment on the greenback was further hit after industrial production numbers came in flat in February, below expectations for a 0.4% gain, while the University of Michigan’s consumer confidence index also disappointed, coming in at 74.3, below expectations for a reading of 75.7.
The greenback had rallied to its highest level against the yen since April 2011 earlier in the week, as investors trimmed back expectations for another round of quantitative easing from the Fed after the central bank upgraded its outlook on the economy and acknowledged the recent improvement in the labor market.
However, policymakers reiterated their intention to keep the benchmark interest rate unchanged at a record low through late 2014 and warned that risks to the economic recovery still remained.
Despite Friday’s data the greenback remained supported against the yen, which has been under pressure since last month’s surprise decision by the BoJ to ease monetary policy and set a targeted inflation rate. Japan’s increasing trade deficit has also threatened the yen’s traditional safe haven status.
Earlier in the week, the BoJ held off announcing any fresh easing measures following its policy meeting, but enlarged a loan fund for businesses in “high-growth” sectors, indicating that the central bank has not moved away from an easing policy.
In the week ahead, the U.S. is to release a flurry of data on the housing sector, which investors will be watching closely to gauge the strength of the economic recovery. Meanwhile, Japan is to release closely watched data on the trade balance.
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 Monday, as there are no relevant events on this day.
Tuesday, March 20
In Japan, markets are to remain closed for a public holiday.
The U.S. is to produce official data on building permits, an excellent gauge of future construction activity, as well as data on housing starts, a leading indicator of economic health. Also Tuesday, Fed Chairman Ben Bernanke is to speak at an event in Washington; his comments will be closely watched for possible indications on the future direction of monetary policy.
Wednesday, March 21
The U.S. is to release industry data on existing home sales, a leading indicator of economic health, as well as official data on crude oil stockpiles.
Thursday, March 22
Japan is to publish official data on the trade balance, the difference in value between imports and exports over the month.
The U.S. is to publish official data on initial jobless claims, a leading indicator of economic health. Also Thursday, Fed Chairman Ben Bernanke is to speak at an event in Washington; his comments will be closely watched for possible indications on the future direction of monetary policy.
Friday, March 23
The U.S. is to round up the week with official data on new home sales, a leading indicator of economic health.
USD/JPY hit 84.17 on Wednesday, the pair’s highest since April 13, 2011; the pair subsequently consolidated at 83.42 by close of trade on Friday, jumping 1.1% over the week.
The pair is likely to find support at 82.87, the low of March 14 and resistance at 84.17, Wednesday’s high.
The dollar weakened against the yen on Friday, after the Department of Labor said consumer price inflation rose 0.4% in February, in line with expectations, fueled largely by pricier gasoline. Core inflation rates, which are stripped of volatile food and energy prices, rose 0.1%, below expectations for a gain of 0.2%.
The soft data fuelled speculation that the Federal Reserve could maintain a policy of economic stimulus, which would dilute the greenback.
Sentiment on the greenback was further hit after industrial production numbers came in flat in February, below expectations for a 0.4% gain, while the University of Michigan’s consumer confidence index also disappointed, coming in at 74.3, below expectations for a reading of 75.7.
The greenback had rallied to its highest level against the yen since April 2011 earlier in the week, as investors trimmed back expectations for another round of quantitative easing from the Fed after the central bank upgraded its outlook on the economy and acknowledged the recent improvement in the labor market.
However, policymakers reiterated their intention to keep the benchmark interest rate unchanged at a record low through late 2014 and warned that risks to the economic recovery still remained.
Despite Friday’s data the greenback remained supported against the yen, which has been under pressure since last month’s surprise decision by the BoJ to ease monetary policy and set a targeted inflation rate. Japan’s increasing trade deficit has also threatened the yen’s traditional safe haven status.
Earlier in the week, the BoJ held off announcing any fresh easing measures following its policy meeting, but enlarged a loan fund for businesses in “high-growth” sectors, indicating that the central bank has not moved away from an easing policy.
In the week ahead, the U.S. is to release a flurry of data on the housing sector, which investors will be watching closely to gauge the strength of the economic recovery. Meanwhile, Japan is to release closely watched data on the trade balance.
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 Monday, as there are no relevant events on this day.
Tuesday, March 20
In Japan, markets are to remain closed for a public holiday.
The U.S. is to produce official data on building permits, an excellent gauge of future construction activity, as well as data on housing starts, a leading indicator of economic health. Also Tuesday, Fed Chairman Ben Bernanke is to speak at an event in Washington; his comments will be closely watched for possible indications on the future direction of monetary policy.
Wednesday, March 21
The U.S. is to release industry data on existing home sales, a leading indicator of economic health, as well as official data on crude oil stockpiles.
Thursday, March 22
Japan is to publish official data on the trade balance, the difference in value between imports and exports over the month.
The U.S. is to publish official data on initial jobless claims, a leading indicator of economic health. Also Thursday, Fed Chairman Ben Bernanke is to speak at an event in Washington; his comments will be closely watched for possible indications on the future direction of monetary policy.
Friday, March 23
The U.S. is to round up the week with official data on new home sales, a leading indicator of economic health.