Forex Pros – The yen pared gains against the U.S. dollar on Friday, after a coordinated effort by the Group of Seven nations to weaken the currency and support Japan’s economy in the wake of the March 11 tsunami and the ensuing nuclear crisis it triggered.
USD/JPY hit 76.12 on Wednesday, the pair’s all time low; the pair subsequently consolidated at 80.55 by close of trade on Friday, tumbling 2.91% over the week.
The pair is likely to find support at 76.12, Wednesday’s low and the all-time low and resistance at 83.29, the high of March 11.
Japan’s Finance Minister, Yoshihiko Noda, said the coordinated central bank interventions were an attempt to limit the damage a strong Japanese currency would have on the nation’s economy.
The yen has surged against the U.S. dollar in the aftermath of the earthquake and tsunami amid speculation that Japanese insurers and corporations would repatriate yen to help pay for massive rebuilding costs.
In addition, the combination of the unfolding nuclear crisis in Japan and ongoing geopolitical tensions in the Middle East and North Africa fuelled increased demand for safe haven assets.
In the week ahead, the yen’s movements will continue to be the main focus for markets. The G-7 have indicated that their efforts would be coordinated and sustained while the Bank of Japan also looks likely to continue sell more yen in the coming days.
Also next week, the Chairman of the U.S. Federal Reserve, Ben Bernanke is to speak while markets in Japan are to remain closed on Monday for a public holiday.
Ahead of the coming week, Forex Pros has compiled a list of these and other significant events likely to affect the markets.
Monday, March 21
Markets in Japan are to remain closed for Vernal Equinox Day.
Meanwhile, the U.S. is to publish industry data on existing home sales, a leading indicator of economic health.
Tuesday, March 22
In the U.S., the President of the Federal Reserve Bank of Dallas, Richard Fisher is to deliver a speech in Frankfurt; his comments will be closely watched for clues to future monetary policy.
Wednesday, March 23
The U.S. is to publish official data on new home sales, a leading indicator of economic health. In addition, the Chairman of the Federal Reserve, Ben Bernanke is to deliver a speech at a public engagement; his comments will be closely watched for any clues to the possible future direction of monetary policy.
Also Wednesday, Japan is to publish official data on its trade balance, the difference in value between imported and exported goods over the month.
Thursday, March 24
The U.S. is to publish official data on durable goods orders, a leading indicator of production as well as data on initial jobless claims, the nation’s earliest employment data.
Later in the day, Japan is to publish government data on consumer price inflation for both Japan and the Tokyo area.
Friday, March 25
The U.S. is to round up the week with final data on its fourth quarter gross domestic product, the broadest measure of economic activity and the primary gauge of the economy’s health. Meanwhile, the University of Michigan is to publish revised data on consumer sentiment and inflation expectations.
ForexPros.com
