Forex Pros – Last week saw the U.S. dollar rally to a six-month high against the broadly weaker yen amid expectations that the Bank of Japan will hold interest rates at ultra-low levels for a prolonged period, following last month’s massive earthquake.
USD/JPY hit 85.52 on Wednesday, the pair’s highest since September 21; the pair subsequently consolidated at 84.77 by close of trade on Friday, gaining 0.70% over the week.
The pair is likely to find support at 83.85, last Monday’s low and resistance at 85.52, Wednesday’s high and a six-month high.
On Thursday, the BoJ said it would offer JPY1 trillion in one-year loans for businesses hurt by the nation’s record earthquake and held the benchmark overnight rate in a range of zero to 0.1%.
Japan’s economy is under “strong downward pressure” after the earthquake damaged production facilities and weakened the financial positions of companies, particularly small enterprises, the central bank said. Pressure will persist “for the time being” before the economy recovers, it added.
The BOJ injected a record amount of emergency cash into the banking system following the quake and doubled its asset-buying fund to 10 trillion yen on March 14.
The dollar slipped against the yen Thursday after a powerful earthquake and tsunami alert shook northeastern Japan. The greenback remained under pressure on Friday, as the White House and Congress attempted to break a U.S. budget deadlock in order to avoid a government shutdown.
In the week ahead, investors will be looking towards March U.S. retail sales data to gauge the strength of consumer spending, as well as U.S. data on consumer and producer price inflation.
Ahead of the coming week, Forex Pros has compiled a list of these and other significant events likely to affect the markets.
Monday, April 11
Japan is to begin the week with government data on machinery orders, a leading indicator of production.
In the U.S., the Federal Reserve Bank of Chicago President Charles Evans is to speak; his comments will be closely watched for any clues to the future possible direction of monetary policy. Also Monday, Federal Reserve Governor Janet Yellen is to speak.
Tuesday, April 12
The U.S. is also to release government data on its trade balance, as well as a report on import prices, an important indicator of inflation. The U.S. is also to publish monthly data on the federal budget balance.
Also Tuesday, the Bank of Japan is to publish the minutes of its most recent monetary policy meeting, providing in-depth insights into the economic conditions that influenced the decision on where to set interest rates.
Wednesday, April 13
The U.S. is to publish government data on retail sales, the primary gauge of consumer spending, which accounts for the majority of overall economic activity. The country is also to publish official data on business inventories and crude oil stockpiles while the Federal Reserve is to publish its Beige Book.
The BoJ is to publish its corporate goods price index, a leading indicator of consumer inflation.
Thursday, April 14
The U.S. is to publish official data on producer price inflation, a leading indicator of consumer inflation. The country is also to publish its weekly report on initial jobless claims, an important signal of overall economic health.
Friday, April 15
The U.S. is to publish official data on consumer price inflation, which accounts for a majority of overall inflation. In addition, the U.S. is to publish official data on industrial production and the capacity utilization rate, while the Federal Reserve Bank of New York is to publish its manufacturing index. The U.S. is also to publish a report on the balance of domestic and foreign investment, while the University of Michigan is to publish preliminary data on consumer sentiment and inflation expectations.
ForexPros.com
