Forex - Yen weaker ahead of Q3 GDP data, China trade also ahead

Investing.com - The Japanese yen traded weaker ahead of third quarter GDP data on Monday and the Aussie held mostly steady ahead of China trade data.

USD/JPY traded at 121.68, up 0.19%, while AUD/USD changed hands at 0.8312, up 0.02%.

China reports trade data for November with expectations of a surplus of $43.15 billion. Japan reports third quarter GDP at 0850 local time (2350 GMT) with a fall of 0.1% expected quarter-on-quarter. Also due out is Japan's current account balance for October.

Last week, the dollar rallied to fresh multi-year highs against a basket of other major currencies on Friday after a particularly strong U.S. employment report prompted investors to bring forward expectations for a hike in U.S. interest rates.

The Labor Department reported that the U.S. economy added 321,000 jobs in November, far more than the 225,000 forecast by economists and the largest monthly increase in almost three years.

September’s figure was revised up to 243,000 from a previously reported 214,000 and the unemployment rate remained unchanged at a six-year low of 5.8%.

The unusually strong data saw investors bring forward expectations for the first hike in U.S. interest rates to mid-2015 from September 2015 before the report.

The dollar has strengthened in recent months on the back of the diverging monetary policy stance between the Federal Reserve and central banks in Europe and Japan, who are expected to continue monetary easing.

The U.S. dollar index, which measures the greenback against a basket of six major currencies, hit a peak of 89.50, the strongest level since March 2009 and ended Friday up 0.82% to 89.39.

In the week ahead investors will be awaiting Thursday's U.S. data on retail sales and jobless claims and Friday’s report on consumer sentiment for further indications on the strength of the economic recovery.

On Monday, Switzerland is to publish reports on retail sales and consumer price inflation, which accounts for the majority of overall inflation.

Later Monday, Canada is to produce data on building starts and housing permits.

China later this week reports on consumer prices and industrial production. Central banks in New Zealand and Switzerland are also to hold policy setting meetings next week.