Forexpros – The U.S. dollar ended the week marginally higher against the yen on Friday, but the pair remained rangebound after the Bank of Japan held off fresh easing measures at its policy meeting on Thursday.
USD/JPY hit 78.78 on Thursday, the pair’s highest since July 19; the pair subsequently consolidated at 78.24 by close of trade on Friday, up 0.44% on the week.
The pair is likely to find support at 77.90, the low of August 1 and resistance at 78.78, Thursday’s high.
The BoJ left the size of the JPY70 trillion asset purchase program unchanged and also kept interest rates unchanged at between zero and 0.1%, in a widely anticipated decision.
The central bank said Japan’s economy was “picking up moderately” but warned that the ongoing debt crisis in the euro zone was a key risk to recovery.
The greenback rose to a three week high against the yen in the U.S. session on Thursday, after robust employment and trade data eased concerns over the U.S. economic outlook.
The Department of Labor said the number of people who filed for unemployment assistance in the U.S. declined to 361,000 last week, from an upwardly revised 367,000 in the previous week, against expectations for an increase to 370,000.
A separate report showed that the U.S. trade deficit dropped to USD42.9 billion in June, its lowest level in two-and-a-half years.
But the greenback turned lower against the yen on Friday, as weaker-than-expected data out of China stoked concerns over a slowdown in global economic growth, fuelling demand for the safe haven yen.
Chinese exports grew just 1.0% on the year in July, down from the 11.3% gain seen in June, while imports rose 4.7% year-over-year, down from 6.3% in June.
Meanwhile, optimism that the European Central Bank will soon move to cut high Spanish and Italian borrowing costs faded as investors waited for more details of the bank’s proposed bond buying program to emerge.
In the week ahead, market participants will be looking ahead to central bank minutes from the BoJ, as well as data on second quarter economic growth in Japan.
Investors will also watching U.S. data on retail sales, inflation and housing in an attempt to assess the strength of the U.S. economic recovery.
Ahead of the coming week, Forexpros has compiled a list of these and other significant events likely to affect the markets.
Monday, August 13
Japan is to release preliminary data on second quarter gross domestic product, which is the broadest measure of economic activity and the primary gauge of the economy’s health.
Tuesday, August 14
The BoJ is to produce the minutes of its most recent policy-setting meeting, which will be closely watched for signs that the central bank is leaning towards further monetary easing. Japan is also to release government data on tertiary industry activity, a key indicator of economic health.
Later Tuesday, the U.S. is to publish official data on retail sales, the primary gauge of consumer spending, as well as data on producer price inflation and business inventories.
Wednesday, August 15
The U.S. is to release official data on consumer price inflation, as well as a report on manufacturing activity in the New York area and government data on net long term securities transactions. The Federal Reserve is also to produce data on the capacity utilization rate and industrial production, followed by a government report on crude oil inventories.
Thursday, August 16
The U.S. is to publish official data on building permits, a key gauge of future construction activity, as well as weekly government data on unemployment claims. The country is also to release official data on housing starts and a report on manufacturing activity in the Philadelphia area.
Friday, August 17
The U.S. is to round up the week with preliminary reports by the University of Michigan on consumer sentiment and inflation expectations.
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