Forexpros – The broadly weaker U.S. dollar tumbled to a record-low against the yen on Friday, after Japan’s government approved fresh measures to counter the yen’s strength, prompting speculation over the country’s resolve to stem the currency’s gains.
USD/JPY hit 75.73 on Friday, the pair’s all time low; the pair subsequently consolidated at 76.26 by close of trade, falling 1.03% over the week.
The pair is likely to find support at 75.73, Friday’s low and resistance at 77.08, Thursday’s high and a three-day high.
On Friday, Japan’s government approved an expansion of the JPY12 trillion package of measures put in place last month to counter the effects of the persistently strong yen on the country’s largely export driven economy.
Japanese Prime Minister Yoshihiko Noda said he expected the plan to “help prevent industrial hollowing out and ward off economic downside risks.”
Investors have interpreted the measures as an acknowledgement that Japan’s government has become resigned to the yen’s strength after efforts to weaken the currency have failed.
The government also reiterated warnings that it may intervene in the foreign exchange market and said it expects “appropriate, decisive” monetary policy from the Bank of Japan.
The greenback was also hit after Federal Reserve Vice Chairman Janet Yellen said that a third round of large-scale securities purchases might be warranted to prop up the U.S. economy, boosting speculation over further easing.
Elsewhere, European Union leaders appeared to move closer to a breakthrough on tackling the deepening debt crisis in the euro zone.
EU leaders were expected to agree on a comprehensive response to the two-year old sovereign-debt crisis at a summit Sunday or at a follow-up meeting on Wednesday.
Ahead of the coming week investors will be closely watching developments in the euro zone. Thursday’s data on U.S. third quarter growth will also be closely watched as investors try to gauge the strength of the U.S. economic recovery. Meanwhile, the BoJ is to announce its benchmark interest rate.
Ahead of the coming week, Forex Pros has compiled a list of these and other significant events likely to affect the markets.
Monday, October 24
Japan is to publish official data on the trade balance, the difference in value between imports and exports over the month.
Tuesday, October 25
The U.S. is to publish industry data on house price inflation as well as a report on consumer confidence, which is a leading indicator of consumer spending.
Wednesday, October 26
The U.S. is to release government data on durable goods orders, a leading indicator of production. The country is also to publish official data on new home sales and crude oil stockpiles.
Thursday, October 27
Japan is to publish government data on retail sales, the foremost indicator of consumer spending, which accounts for the majority of overall economic activity. Meanwhile, the Bank of Japan is to announce its benchmark interest rate. Following the announcement, BoJ Governor Masaaki Shirakawa will hold a press conference to discuss monetary policy.
The U.S. is to publish preliminary data on third quarter gross domestic product, the broadest measure of economic activity and the primary gauge of the economy’s health, as well as the GDP price index, the broadest measure of inflation. The country is also to publish its weekly data on initial jobless claims and an industry report on pending home sales.
Friday, October 28
Japan is to publish official data on household spending, which accounts for the majority of overall economic activity. The country is also to produce government data on consumer price inflation and the unemployment rate, as well as preliminary data on industrial production.
The U.S. is to round up the week with a flurry of data on personal income, personal spending, employment costs and consumer prices. Meanwhile, the University of Michigan is to publish revised data on consumer sentiment and inflation expectations.
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