Forex – USD/JPY sharply lower in afternoon U.S. trade

Forexpros – The U.S. dollar fell against the Japanese yen in U.S. trade Friday to its lowest level since the most recent intervention by the Bank of Japan, as developments in Europe failed to quell ongoing concerns over the region’s debt woes.

In afternoon U.S. trade USD/JPY hit 77.05, the pair’s lowest since October 31; the pair subsequently consolidated at 77.24, sinking 0.53%.

The pair was likely to find support at 75.58, the low of October 31, and resistance at 78.98, the high of November 1.

Japanese Finance Minister Jun Azumi said earlier Friday that the ministry was monitoring the foreign exchange market closely for unusual swings in Japan’s currency but stopped short of divulging whether the BOJ had been selling yen this month.

The yen generally strengthens during periods of economic instability, due to Japan’s export-driven economy and its self-reliance in raising capital to balance current accounts.

Meanwhile in the U.S., the University of Michigan reported Friday that its Consumer Sentiment Index rose more than expected to 64.2 in November, up from 60.9 the previous month.

The University’s index is based on a survey of approximately 500 consumers and rates the relative level of current and future economic conditions in the U.S. Economists had forecast the index to rise to 60.1 for the period.

On Friday, the Italian Senate approved, by a vote of 156 to 12, to approve the budget-cutting measures promised to the European Union in exchange for assistance in reining in the country’s national debt of USD2.6 trillion.

Yields on Italy’s 10-year bonds fell for the second day after rising to record levels earlier in the week, nearing the 7% threshold that prompted Ireland, Portugal and Greece to seek bailouts.

And in Athens, Lucas Papademos was sworn in as the country’s new prime minister to replace outgoing Greek leader George Papandreou.

Wall Street shares jumped on the news from Italy, on pace for their fourth gain in five sessions; The Dow Jones Industrial Average rose 2.3% to 12,167.90, the Nasdaq Composite Index added 2.15% to 2,681.58 and the S&P 500 gained 2.08% to trade at 1,265.53.

Meanwhile, the yen moved lower against both the euro and the British pound with EUR/JPY up 0.51% to hit 106.20, and GBP/JPY rising 0.26% to hit 124.03.

The Bank of Japan was scheduled to deliver its latest monthly report on current and future economic conditions on Monday.