Forex Pros – Last week saw the U.S. dollar fall below 80.00 against the yen for the first time since the Group of Seven nations and the Bank of Japan intervened to weaken the currency on March 18, in the wake of Japan’s triple disaster.
USD/JPY hit 79.56 on Thursday, the pair’s lowest since March 18; the pair subsequently consolidated at 80.60 by close of trade on Friday, shedding 0.60% over the week.
The pair is likely to find short-term support at 79.56, Thursday’s low and resistance at 81.68, last Monday’s high.
On Friday, Japan’s Finance Minister Yoshihiko Noda said he will carefully watch the rising yen, but stopped short of threatening currency-market intervention in a sign that it may take sharper gains in the currency to spur Japanese action.
On Thursday, Mr. Noda had said the conditions behind the yen’s recent strength were “different” from those on March 18, when the G-7 intervened in the market to curb the yen’s rise.
The dollar has weakened broadly since U.S. Federal Reserve Chairman Ben Bernanke signaled last month that the central bank was likely to keep interest rates close to record lows for some time to come.
However, the greenback trimmed losses on Friday after official data showed that U.S. nonfarm payrolls rose by 244,000 in April, as the private sector posted the strongest employment gain in five years.
A separate report showed that the U.S. unemployment rate rose to 9.0% last month from 8.8% in March. It was the first increase in the jobless rate since November, when it hit 9.8%. Economists had forecast that payrolls would rise by 185,000 and that the jobless rate would remain unchanged at 8.8%.
In the week ahead, investors will be looking towards U.S. data on retail sales and inflation to gauge the strength of the U.S. economic recovery while the BoJ is to publish the minutes of its most recent policy meeting.
Ahead of the coming week, Forex Pros has compiled a list of these and other significant events likely to affect the markets.
Monday, May 9
The Bank of Japan is to publish the minutes of its most recent monetary policy meeting. The minutes provide investors with in-depth insights into the economic conditions that influenced the rate setting decision.
Tuesday, May 10
The U.S. is to release official data on import prices, an important inflationary indicator as well as data on economic optimism and wholesale inventories.
Wednesday, May 11
Japan is to publish an index of leading economic indicators, designed to predict the future direction of the economy.
The U.S. is to publish official data on its trade balance, the difference in value between imported and exported goods and services. In addition, the country is to publish government data on crude oil inventories and the federal budget balance.
Thursday, May 12
The U.S. is to publish a weekly report on initial jobless claims as well as official data on producer price inflation, a leading indicator of consumer inflation. The country is also to publish government data on retail sales, the primary gauge of consumer spending, which accounts for the majority of overall economic activity.
Later in the day, Federal Reserve Chairman Ben Bernanke is to testify before the Senate Banking Committee in Washington.
Also Thursday, Japan is to produce preliminary data on machine tool orders as well as official data on its economy watchers sentiment survey, which monitors consumer spending.
Friday, May 13
The U.S. is to round up the week with official data on consumer price inflation while the University of Michigan is to publish preliminary data on consumer sentiment and inflation expectations.