Forex Pros – The U.S. dollar closed the week trading at a two-week low against the yen on Friday, as concerns over slower U.S. growth after a flurry of worse-than-expected economic data weighed on the greenback.
USD/JPY hit 82.21 on Tuesday, the weekly high; the pair subsequently consolidated at 80.77 by close of trade on Friday, tumbling 1.22% over the week.
The pair is likely to find short-term support at 80.04, the low of May 6 and resistance at 81.41, Friday’s high.
On Friday, the National Association of Realtors’ said pending home sales index fell 11.6% in April, much worse that the 1.0% decline forecast. A separate report showed that U.S. customer spending rose just 0.4% last month, less than the expected 0.5% gain.
Earlier in the week, revised data showed that U.S. gross domestic product grew more slowly than forecast in the first quarter, rising at 1.8% annual rate, disappointing expectations for a 2.1% increase.
Earlier in the week the yen shrugged off data showing that Japan’s exports dropped by 12.5% in April, from a year earlier, after the earthquake and tsunami in March disrupted factory production. The large decline in exports pulled the country into the first trade deficit for the month of April in 31 years.
Meanwhile, on Friday, ratings agency Fitch cut its outlook for Japan’s sovereign debt to negative from stable, citing the economic risks associated with the country’s nuclear power plant crisis and noting that the country’s gross debt ratio was already the highest of any country it tracks. The move followed similar actions by ratings agencies Standard & Poor’s and Moody’s.
Following the announcement, the head of the Bank of Japan Masaaki Shirakawait called on the government to tackle the country’s “very serious” fiscal state.
In the week ahead, U.S. markets will be closed on Monday for a public holiday, while investors will be looking towards Friday’s data on U.S. non-farm payrolls to gauge the strength of the economic recovery.
Ahead of the coming week, Forex Pros has compiled a list of these and other significant events likely to affect the markets.
Monday, May 30
Markets in the U.S. are to remain closed for Memorial Day.
Tuesday, May 31
Japan is to publish official data on household spending and average cash earnings, as well as preliminary data on industrial production, a leading indicator of economic health. The country is also to publish official data on manufacturing activity, unemployment and housing starts.
Also Tuesday, the U.S. is to publish industry data on house price inflation and consumer confidence, as well as an index of manufacturing activity in the Chicago area.
Wednesday, June 1
U.S. payroll processing firm ADP is to publish its report on non-farm payrolls, which leads government data by two days. Meanwhile, the U.S. Institute of Supply Management is to publish data on manufacturing activity.
Thursday, June 2
Japan is to publish official data on capital spending, a leading indicator of economic health.
Also Thursday, the U.S. is to publish its weekly report on initial jobless claims, as well as revised data on non-farm productivity and labor costs. The country is also to publish official data on factory orders, a leading indicator of production, and a government report on crude oil stockpiles.
Friday, June 3
The U.S. is to round up the week with a flurry of data, including a government report on non-farm employment change, a big market mover. The U.S. is also to release official data on the overall unemployment rate and average hourly earnings, while the Institute of Supply Management is to publish its index of service sector growth.
ForexPros.com
