Forexpros – The U.S. dollar was steady against the yen on Wednesday, as investors remained cautious amid ongoing fears over the handling of Spain’s financial woes while comments by Bank of Japan Governor Masaaki Shirakawa slightly pressured the yen.
USD/JPY hit 79.69 during early European trade, the pair’s highest since June 11; the pair subsequently consolidated at 79.55, inching up 0.04%.
The pair was likely to find support at 79.16, Tuesday’s low and resistance at 80.06, the high of May 23.
Fears that a bailout for Spain’s banking sector could add to the country’s fiscal problems pushed the yield on Spanish 10-year bonds to a euro-era high of 6.82% on Tuesday, just below the critical 7% threshold which prompted bailouts in Greece, Ireland and Portugal.
Meanwhile investors were focused on the outcome of Sunday’s general election in Greece, where pro and anti-bailout parties are neck-and neck in the polls, fuelling fears that the country could be forced to exit the euro area.
The yen came under pressure after BoJ Governor Shirakawa said earlier that the central bank is pursuing powerful monetary easing to achieve its 1% inflation goal and will carefully assess the effect of Europe’s debt woes on the economy.
The comments came ahead of the BoJ’s two-day policy-setting meeting that ends on Friday.
Earlier Wednesday, government data showed that core machinery orders in Japan rose more-than-expected in April, climbing 5.7% after a 2.8% fall the previous month. Analysts had expected core machinery orders to rise 2% in April.
Elsewhere, the yen was fractionally lower against the euro with EUR/JPY easing up 0.09%, to hit 99.55.
Later in the day, the U.S. was to release official data on retail sales and producer price inflation.
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