The USD/JPY pair continued its downside wave for the third week, reaching its lowest level in five weeks. The Japanese currency used the unchanged tone for the Fed policy makers to climb over the weak dollar.


The Fed policy makers didn’t give any sign of thinking about tightening their monetary policy anytime soon during their meeting last week after they kept interest rate at a historic low; pushing the dollar index down by 0.5% and opening the way for the yen and other currencies to achieve more gains against greenback.


On the other hand, Bank of Japan kept interest rate unchanged at virtually zero, in the efforts to support the Japanese economy from the March 11 quake aftermath. The Japanese policy makers kept the asset-purchases fund unchanged at 10 trillion yen, in addition to the credit-loan program which was kept steady at 30 trillion yen, while the BOJ accept BBB-rated corporate bonds as collateral.


The Japanese yen was the strongest currency last week, as the Bank of Japan raised its forecast for consumer prices from 0.3 percent to 0.7 percent for the fiscal year of 2011.


Deflation risks still surrounded Japan, but it looks like the liquidity injections by the BOJ have helped in rising prices and reducing the deflationary effects. Also the fact that the BOJ refused a proposal to expand its stimulus package by 5 trillion yen, encourage investors to increase demand for the Japanese currency.


The Japanese economy is not going to release any fundamental during this week, while the U.S. economy will grab attentions when it announce the infamous jobs report for the month of April on Friday.


Major highlights for this week that will affect the USD/JPY pair’s trading:


Monday April 2:


The U.S. economy will start the week with the construction spending index for March at 14:00 GMT, where it’s expected to show an increase of 0.3% after the previous decline of 1.4%.


The ISM manufacturing data will be released at 14:00 GMT and expected to come at 60.1 compare the previous of 61.2.


Tuesday April 3:


The United States will release the factory orders for March at 14:00 GMT, where the previous reading was –0.1% and the expectation is for a rise by 1.5%.


Wednesday April 4:


The US ADP employment change is due at 12:15 GMT which expected to show 200,000 added jobs in April from a 201,000 the previous month.


Further the USD ISM Non-manufacturing composite has a heavy effect on the market movement, which will be released at 14:00 GMT and expected with further expansion to 57.8 in April from 57.3 during March.


Thursday April 5:


At 12:30 GMT the U.S economy will release the weekly initial claims numbers, where the number of people filing for first-time claims for state unemployment insurance has reached 429 thousand.


Friday April 6:


The United States of America will issue a number of economic data on Friday, starting with the non-farm payrolls at 12:30 GMT, which is expected to show that the U.S. economy added 196 thousand jobs during the month of April compared with the previous 216 thousand jobs.


Unemployment rate during the month of April is expected to settle at 8.8% while the yearly average hourly earnings index is expected to rise by 1.7%.


Any improvement in new jobs in the United States could drive the dollar to rise more against the Japanese yen, as it reflect the stronger recovery in employment and the U.S. economy supporting of course the dollar and the risk appetite which could drive the yen lower on risk demand. 

Originally posted here

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