Forexpros – The broadly stronger U.S. dollar climbed to a two-week high against the yen on Friday, as Japanese government bond prices fell sharply with investors dumping riskier assets amid concerns over the deepening debt crisis in the euro zone.
USD/JPY hit 77.78 on Friday, the pair’s highest since November 10; the pair subsequently consolidated at 77.71 by close of trade, climbing 1.13% over the week.
The pair is likely to find support at 76.91, Wednesday’s low and resistance at 78.18, the high of November 7.
Japanese bond prices fell amid concerns over the country’s debt burden after ratings agency Standard & Poor’s said that it is moving closer to downgrading Japan’s debt. S&P currently rates Japan at AA- and has had a negative outlook on the rating since April.
Elsewhere, the International Monetary Fund warned Friday that Japan’s debt could “quickly become unsustainable.”
Japan is more indebted than any other industrialized country, including those in Europe, with its debt twice the size of its annual gross domestic product.
Market sentiment had already been hit by concerns that the debt crisis in the euro zone may be deepening after Italian borrowing costs climbed above 7%, a level seen as unsustainable in the long term, following a disappointing bond auction.
The auction came two days after Germany, the euro zone’s largest economy, missed its EUR6 billion sales target at an auction of 10-year bonds, in its least successful debt sale since the launch of the single currency.
Also Friday, Japan’s minister for economic and fiscal policy Motohisa Furukawa warned over the impact of the escalating debt crisis in the euro zone, saying the government was working with the Bank of Japan in dealing with potential contagion risks.
In the week ahead, investors will be eyeing an auction of Belgian government debt on Monday after S&P downgraded its rating on Belgium by one notch on Friday.
Meanwhile, euro zone finance ministers are to meet Wednesday to discuss details on leveraging the region’s bailout fund, although a major announcement is unlikely.
Also next week, the U.S. is to release its closely watched report on non-farm payrolls.
Ahead of the coming week, Forex Pros has compiled a list of these and other significant events likely to affect the markets.
Monday, November 28
The U.S. is to release official data on new home sales, a leading indicator of economic health.
Tuesday, November 29
Japan is to publish official data on retail sales, the foremost indicator of consumer spending, which accounts for the majority of overall economic activity as well as data on household spending and the unemployment rate.
The U.S. is to release industry data on house price inflation as well as a report on consumer confidence, a leading indicator of consumer spending.
Wednesday, November 30
Japan is to release official data on manufacturing activity, as well as preliminary data on industrial production, a leading indicator of economic health. The country is also to publish data on average earnings and housing starts.
Later in the day, the U.S. is to release a closely watched report on non-farm payrolls compiled by payroll processing firm ADP, which leads government data by two days. The U.S. is also to release data on manufacturing activity in the Chicago area as well as government reports on pending home sales, non-farm productivity, labor costs and crude oil stockpiles.
Thursday, December 1
The U.S. is to release its weekly report on initial jobless claims, while the Institute of Supply Management is to publish data on manufacturing activity, a leading indicator of economic health.
Friday, December 2
Japan is to produce official data on capital spending, a leading indicator of economic health.
The U.S. is to round up the week with a closely watched government report on non-farm employment change, a leading indicator of economic health, as well as data on average hourly earnings and the unemployment rate.
Forexpros
