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Forex - USD/JPY weekly outlook: March 7-11

Published 03/06/2011, 07:06 AM
USD/JPY
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Investing.com – Last week saw the U.S. dollar advance to an eight-day high against the yen, before paring gains on Friday, after U.S. jobs data for February came in better than expected but disappointed investors who hoped for an even stronger report.

USD/JPY hit 83.07 on Friday, the pair’s highest since February 22; the pair subsequently consolidated at 82.28 by close of trade, gaining 0.74% over the week.

The pair is likely to find support at 81.71, Thursday’s low and resistance at 83.07, Friday’s high.

The U.S. Department of Labor said Friday that employers added 192,000 jobs in February, the most since May, surpassing expectations for an increase of 180,000. The unemployment rate unexpectedly dipped to 8.9%, the lowest since April 2009, from 9.0% in January.

However, the data disappointed some investors who see strong U.S. jobs growth as necessary for the Federal Reserve to end its second round of quantitative easing and raise interest rates.

Also Friday, crude oil for April delivery rose to USD105.17 a barrel in New York, the highest level since September 2008, amid fears that continuing unrest in the Middle East and violence in Libya will disrupt global supplies.

The recent spike in oil prices has fuelled demand for safe haven assets amid fears over the impact of higher energy costs on the rate of global economic growth.

In the week ahead, the U.S. is to release official data on retail sales for February as well as the University of Michigan Consumer Sentiment preliminary reading for March.

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

Monday, March 7

The U.S. is to begin the week with official data on consumer credit, which is closely correlated with consumer confidence.

Meanwhile, Japan is to publish official data on bank lending and M2 money stock as well as a report on the country’s current account balance.

Tuesday, March 8

Japan is to publish government data on core machinery orders, a leading indicator of production while the Governor of the Bank of Japan, Masaaki Shirakawa is to deliver a speech in Frankfurt.

Also Tuesday, the U.S. is to publish a report on economic optimism.

Wednesday, March 9

The U.S. is to publish a government report on crude oil stockpiles while Japan is to publish final data on fourth quarter gross domestic product, the broadest measure of economic activity and the primary gauge of the economy's health.

Thursday, March 10

The U.S. is to publish a key weekly report on initial jobless claims, the nation’s earliest employment data. The country is also to publish a report on the trade balance, the difference in value between imported and exported goods and services over the month.

Japan is to publish preliminary data on machine tool orders, an important indicator of industrial production.

Friday, March 11


The U.S. is to round up the week with government data on retail sales, the primary gauge of consumer spending, which accounts for the majority of overall economic activity. The nation is also to publish a report on business inventories, while the University of Michigan is to produce preliminary data on consumer sentiment and inflation expectations.

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