Forexpros – The U.S. dollar rose to a six-day high against the yen on Thursday, as the absence of further monetary easing measures by the Federal Reserve lent support to the greenback while comments by Bank of Japan policymakers weighed on demand for the yen.
USD/JPY hit 79.74 during early European trade, the pair’s highest since June 16; the pair subsequently consolidated at 79.62, adding 0.10%.
The pair was likely to find support 79.15, the low of June 14 and resistance at 80.13, the high of May 22.
Pressure on the greenback eased after the U.S. central bank held bank from launching a fresh round of quantitative easing. The Fed did however decide to expand its “Operation Twist” by USD267 billion, extending the program until the end of the year.
The program aims to drive down long-term interest rates and reduce borrowing costs for businesses and households, in order to boost the sluggish U.S. economy.
Meanwhile, safe haven demand strengthened after China’s HSBC purchasing managers’ index for June fell to 48.1 compared with 48.4 in May, remaining in contraction territory for the eighth straight month.
Markets were also eyeing an audit of Spanish banks later in the day, amid concerns that the results could show that a EUR100 billion bailout for the country’s banks agreed earlier this month would not be large enough.
Elsewhere, the yen came under pressure after Bank of Japan policymaker Koji Ishida said earlier that the central bank is prepared to take bold action to support the economy when necessary, signaling the possibility of further monetary easing next month.
The yen was higher against the euro with EUR/JPY falling 0.11%, to hit 100.95.
Later in the day, the U.S. was to produce government data on unemployment claims, followed by preliminary data on manufacturing activity and an industry report on existing home sales. The country was also to release data on manufacturing activity in the Philadelphia area.
Forexpros
