Forexpros – The U.S. dollar ended the week higher against the yen on Friday, as renewed concerns over the euro zone debt crisis and a grim global outlook bolstered demand for the greenback as a safe haven.
USD/JPY hit 77.19 on Friday, the pair’s highest since September 15; the pair subsequently consolidated at 77.03 by close of trade on Friday, gaining 0.73% over the week.
The pair is likely to find support at 76.10, the low of August 22 and resistance at 77.58, the high of September 12.
The dollar rose to an eleven-day high against the yen on Friday, after an unexpected rise in euro zone inflation for September dampened hopes that the European Central Bank will cut interest rates to shore up the region’s economy.
Adding to global concerns, China’s manufacturing sector posted a contraction for the third consecutive month, prompting investors to pile into safer assets.
But the dollar remained supported amid growing speculations that the Bank of Japan may resort to strict monetary measures in order to curb the strong appreciation of the nation’s currency. The BoJ is due to announce its benchmark interest rate and to hold a press conference on monetary policy later in the week.
Meanwhile revised data on Thursday showed that the U.S. economy grew more than previously estimated in the second quarter. In its final estimate for the quarter, the Commerce Department said gross domestic product grew at annual rate of 1.3%, up from the previously estimated 1.0%.
Earlier in the week, the Federal Reserve announced that it will purchase USD44 billion of longer maturity Treasuries and sell the same amount of shorter term debt in October, under its monetary stimulus plan dubbed “Operation Twist”.
In the coming week, markets will be closely watching the outcome of Friday’s policy-setting meeting by the Bank of Japan. Meanwhile, data on U.S. non-farm payrolls will also be a major focus for the week.
Ahead of the coming week, Forex Pros has compiled a list of these and other significant events likely to affect the markets.
Monday, October 3
Japan is to produce official data on activity in the manufacturing and non-manufacturing sectors.
Later in the day, the U.S. Institute of Supply Management is to publish data on manufacturing activity.
Tuesday, October 4
Japan is to release official data on average earnings, which is closely correlated with consumer spending.
Later Tuesday, the U.S. is to release official data on factory orders, a leading indicator of production, while Federal Reserve Chairman Ben Bernanke is to speak in Washington.
Wednesday, October 5
The U.S. is to release a report on non-farm payrolls, compiled by payroll processing firm ADP, which leads government data by two days.
Meanwhile, the ISM is to produce a report on service sector activity, a leading indicator of economic health. The country is also to release government data on crude oil inventories.
Thursday, October 6
The U.S. is to release its weekly report on initial jobless claims.
Friday, October 7
The Bank of Japan is to announce its benchmark interest rate; the announcement will be followed by a closely watched press conference to discuss monetary policy in detail.
The U.S. is to round up the week with the monthly report on non-farm payrolls, which is a leading indicator of job creation. The country is also to publish official data on the unemployment rate and average hourly earnings.
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