Forexpros – The U.S. dollar ended the week slightly higher against the yen on Friday, after better-than-expected U.S. employment data and following comments by Japanese Finance Minister Jun Azumi.
USD/JPY hit 77.28 on Wednesday, the pair’s lowest since November 25; the pair subsequently consolidated at 77.95 by close of trade on Friday, easing up 0.5%.
The pair is likely to find support at 77.28, Wednesday’s low and resistance at 78.23, the high of November 28 and a three-week high.
The yen turned lower against the greenback on Friday after Japan’s Finance Minister Jun Azumi said he would not hesitate to intervene in the currency exchange market if he deemed it necessary to counter speculation-driven rises in the yen.
Earlier in the week, the governor of the Bank of Japan warned that the outlook for the country’s economy remained clouded by the ongoing debt crisis in the euro zone and the strong yen and indicated the bank’s readiness to increase monetary stimulus if necessary.
Meanwhile, the U.S. Department of Labor said the unemployment rate dropped unexpectedly to a two-and-a-half year low of 8.6% in November, as the U.S. economy created 120,000 new jobs.
But the greenback remained supported amid renewed concerns that the debt crisis in the euro zone is deepening, as investors attention turned towards this week’s policy decision by the European Central Bank and a critical meeting of European Union leaders on Friday.
On Thursday, ECB President Mario Draghi indicated that the bank was ready to take stronger action to fight the region’s debt crisis if political leaders can agree on much tighter budget controls at the summit.
The dollar fell sharply against all of its major counterparts on Wednesday, after six major central banks, including the Federal Reserve and the Bank of Japan announced a coordinated action to lower dollar swap rates to prevent a lack of liquidity in the global financial system.
The surprise announcement came after China said that it plans to cut banks’ reserve requirement ratios in an effort to help boost liquidity and support the world’s second largest economy amid global market turmoil.
In the week ahead, investors will be closely watching Thursday’s ECB policy meeting amid expectations for a 0.5% rate cut by the bank and awaiting the outcome of Friday’s EU summit.
Ahead of the coming week, Forex Pros has compiled a list of these and other significant events likely to affect the markets. The guide skips Tuesday, as there are no relevant events on this day.
Monday, December 5
In the U.S., the Institute of Supply Management is to release a report on service sector activity, a leading indicator of economic health. The U.S. is also to publish government data on factory orders, a leading indicator of production.
Wednesday, December 7
Japan s to publish an index of leading economic indicators, designed to predict the future direction of the economy.
Later in the day, the U.S. is to release government data on crude oil stockpiles.
Thursday, December 8
Japan is to release official data on core machinery orders, a leading indicator of production. The country is also to publish government data on the current account balance and bank lending.
Also Thursday, the U.S. is to publish its weekly report on initial jobless claims, the nation’s earliest economic data.
Friday, December 9
Japan is to publish official data on manufacturing activity, as well as revised data on third quarter gross domestic product, the primary measure of economic activity and the foremost indicator of the economy’s health.
The U.S. is to round up the week with data on the trade balance, the difference in value between imported and exported goods over the month. Meanwhile, the University of Michigan is to release preliminary data on consumer sentiment and inflation expectations, leading indicators of economic health.
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