Forex Pros — The U.S. dollar ended the week higher against the yen on Friday, amid increased risk appetite and after the Bank of Japan’s quarterly tankan survey showed a decline in business sentiment in the aftermath March’s earthquake and tsunami.

USD/JPY hit 80.26 on Thursday, the pair’s lowest since June 24; the pair subsequently consolidated at 80.80 by close of trade on Friday, gaining 0.60% over the week.

The pair is likely to find short-term support at 79.99, the low of June 17 and resistance at 81.26, the high of June 28 and a three-week high.

The BoJ’s large manufacturers’ business sentiment index tumbled to minus 9 in the three months to June, from plus 6 in the previous March survey. It was the first negative reading in five quarters and surpassed expectations for a decline to minus 7.

However, government data released earlier in the week showed that the worst of the after effects from the March disaster may already be over.

The Trade Ministry said Wednesday that industrial production rose at the fastest pace in more than 50 years in May, as automakers resumed operations, with factory output increasing 5.7%, outstripping expectations for a 5.6% gain.

Meanwhile, risk sentiment was boosted after Greece’s parliament approved two bills to authorize a EUR28.4 billion, five-year austerity package needed to secure a EUR12 billion tranche of bailout funds from the European Union and International Monetary Fund.

Also Friday, the U.S. Institute for Supply Management said its June manufacturing index came in at 55.3, above the 51.5 forecast, marking the 23rd consecutive month of growth.

But the dollar pared gains after a report showing that construction spending hit an almost 12-year low in May, reinforcing expectations that the Federal Reserve will keep interest rates on hold for some time to come.

In the week ahead, the main focus is likely to be on U.S. reports on service sector growth and June non-farm payrolls, while Japan is to publish official data on core machinery orders and average cash earnings.

Ahead of the coming week, Forex Pros has compiled a list of these and other significant events likely to affect the markets.

Monday, July 4

Markets in the U.S. are to remain closed for Independence Day.

Tuesday, July 5

Japan is to publish official data on average cash earnings, which is closely linked to consumer spending.

Later in the day, the U.S. is to publish government data on factory orders, a leading indicator of production.

Wednesday, July 6

The U.S. Institute of Supply Management is to publish a report on service sector growth, a leading indicator of economic health.

Thursday, July 7

Japan is to release government data on core machinery orders, a leading indicator of production.

In the U.S., payroll processing firm ADP is to publish a report on non-farm payrolls, which leads government data by one day. The U.S. is also to release a weekly report on initial jobless claims, the nation’s earliest economic data.

Friday, July 8

The U.S. is to round up the week with government reports on average hourly earnings, a leading indicator of consumer inflation as well as official data on non-farm payrolls and the country’s overall unemployment rate.

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Forexpros