Forexpros – The U.S. dollar fell against the yen on Friday after unexpectedly weak U.S. employment data fuelled speculation that the Federal Reserve may implement a fresh round of monetary easing measures to bolster economic growth.
USD/JPY hit 77.65 on Friday, the pair’s lowest since February 14; the pair subsequently consolidated at 77.98 by close of trade, down 2.14% on the week.
The pair is likely to find near-term support at 77.35, the low of February 14 and resistance at 78.64, Friday’s high.
The Department of Labor said that the U.S. economy added just 69,000 jobs in May, far below expectations for a gain of 150,000, while the unemployment rate ticked up to 8.2% from 8.1%.
A separate report showed that manufacturing activity in the U.S. slowed in May. The Institute for Supply Management’s manufacturing index fell to 53.5 from 54.8 in April, against expectations for a decline to 53.9.
The weak data added to concerns that the economic recovery in the U.S. is losing momentum, which could lead to a third round of quantitative easing from the Federal Reserve.
The greenback hit an intra-day low against the yen following the disappointing employment data.
The greenback came off the session low of 77.65 earlier, after a drop below the 78.00 level prompted the Bank of Japan conduct a rate check, indicating that it is still prepared to intervene to stem the yen’s gains.
Meanwhile, Japan’s Finance Minister Jun Azumi said Friday that the strength of the yen did not reflect economic fundamentals in Japan and warned that if “excessive” and “one-sided” moves continued, he would “respond decisively”.
Demand for the safe haven yen has also remained supported in recent weeks amid fears that Spain’s near unsustainable borrowing costs could force Madrid to seek outside financial aid to bailout its ailing banking sector.
The euro tumbled to 95.59 against the yen on Friday, its lowest level since March 2011, before trimming back some losses to settle at 96.97, down 3.3% on the week.
In the week ahead, investors will be on the alert for any signs of an intervention by Japan, while Wednesday’s interest rate decision and subsequent press conference by the European Central Bank will also be closely watched.
Market participants will also be watching Thursday’s testimony on the economic outlook by Fed Chairman Ben Bernanke for any indications that the central bank is considering more monetary easing.
Ahead of the coming week, Forexpros has compiled a list of these and other significant events likely to affect the markets.
Monday, June 4
The U.S. is to produce official data on factory orders, a leading indicator of production.
Tuesday, June 5
In the U.S., the Institute for Supply Management is to release a report on non-manufacturing activity, a key indicator of economic health.
Wednesday, June 6
The U.S. is to release revised data on nonfarm productivity, followed by government data on crude oil stockpiles, while the Federal Reserve is to release its Beige Book.
Thursday, June 7
The U.S. is to release government data on initial unemployment claims, while Fed Chairman Ben Bernanke is to appear before the Joint Economic Committee, in Washington.
Friday, June 8
Japan is to release government data on the country’s current account, as well as revised data on first quarter economic growth.
The U.S. is to round up the week with government data on its trade balance, the difference in value between imported and exported goods and services.
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