Forex – USD/JPY sets new all-time low in afternoon U.S. trade

Forexpros – The U.S. dollar fell to a fresh record low against the Japanese yen in U.S. trade Friday, as investor interest returned to the Japanese currency in light of progress perceived on Europe’s sovereign debt crisis.

In afternoon U.S. trade USD/JPY hit 75.70, the pair’s all-time low; the pair subsequently consolidated at 75.71, gaining 0.32%.

The pair was likely to find support at 75.70, the all-time low, and resistance at 77.09, last Thursday’s high.

On Thursday, Japan’s Finance Minister Jun Azumi vowed that Japan would take decisive action to prevent further excessive moves by the yen. The Bank of Japan earlier announced plans for further monetary easing by expanding its asset purchase program by JPY5 trillion to JPY55 trillion.

Finance Minister Jun Azumi repeated a commitment to take firm steps against the yen’s rise as necessary, and alerted traders of possible currency market intervention from the Bank of Japan.

European officials on Thursday presented their long-anticipated plan to address the euro-zone debt threat with an expansion of the European Financial Stability Facility to USD1.4 trillion.

The agreement included a vow from private investors to write-down 50% of their holdings in Greek government debt, as well a recapitalization of European banks with assistance from the International Monetary Fund.

Japanese Prime Minister Yoshihiko Noda said Friday that Japan will contribute to the European bailout fund in a “suitable way” but urged European leaders to make “even greater efforts” to extinguish the spread of debt contagion in the euro-zone.

“The fire is not on the other side of the river,” Noda told the Financial Times. “Currently, the most important thing is to ensure it does not spread to Asia or the global economy.”

In the U.S., the Bureau of Economic Analysis reported Friday that personal spending rose to a seasonally adjusted 0.6% in September from 0.2% in the previous month, in line with market expectations.

Personal income, however did not keep pace with spending, rising only 0.1% in September, below market expectations of a 0.3% rise. The figures suggest that U.S. consumers were dipping into savings or taking on new debt in order to increase spending.

In afternoon trade on Wall Street the Dow Jones Industrial Average fell 0.07% to 12,200.30, the Nasdaq Composite Index lost 0.37% to 2,728.49 and the S&P 500 was lower by 0.31% to 1,280.57.

Meanwhile, the yen moved higher against both euro but down against the British pound with EUR/JPY down 0.47% to hit 107.24, and GBP/JPY dropping 0.15% to hit 122.06.

The Bank of Japan was due to release minutes from its latest policy meeting early next week.