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Forex - USD/JPY weekly outlook: November 26 - 30
ForexNov 25, 2012 07:54AM ET
Investing.com - The U.S. dollar declined against the yen on Friday, but remained close to a seven-month high amid ongoing expectations that upcoming elections will result in growing political pressure on the Bank of Japan to implement more aggressive monetary easing measures.
hit 82.82 on Thursday, the pair’s highest since April 4; the pair subsequently consolidated at 82.37 by close of trade on Friday, 1.31% higher for the week.
The pair is likely to find support at 82.05, Friday’s low and resistance at 82.82, Thursday’s high.
The yen has been weighed by speculation the country’s main opposition leader, Shinzo Abe will win next month's general election. Abe recently said he wanted the Bank of Japan adopt interest rates of zero or below zero to enhance lending.
The BoJ kept the size of its asset purchase program unchanged at JPY91 trillion following its policy-setting meeting earlier in the week, but expectations for further easing next month remained intact.
Meanwhile, in the euro zone, Greece’s Finance Minister said the International Monetary Fund had relaxed its debt-cutting target for the country, suggesting lenders were closer to a deal for a vital aid tranche to be paid.
However, other sources involved in the talks cautioned that the funding gap was far bigger than Greece has suggested.
Talks between finance ministers and the International Monetary Fund ended without a deal on Tuesday, amid disagreements on how best to reduce the country’s debt to sustainable levels.
Investor confidence also strengthened after the German Institute for Economic Research earlier said that its index of business confidence improved to 101.4 in November from a reading of 100.0 the previous month, beating expectations for a decline to 99.5.
Elsewhere, investors continued to remain concerned over the U.S. fiscal cliff, automatic tax hikes and spending cuts due to come into effect on January 1.
There are fears the U.S. economy will fall back into a recession, unless a divided Congress and the White House can work out a compromise in the six weeks left before the January 1 deadline.
In the week ahead market participants will be focusing on developments relating to the U.S. fiscal cliff, as well as Monday’s meeting of the euro group of finance ministers to discuss unlocking Greece’s next aid installment.
Investors will also be anticipating data on Japanese retail sales and consumer price inflation.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
Monday, November 26
The Bank of Japan is to publish the minutes of its monetary policy meeting, which contain important insights into current and future economic conditions from the bank’s perspective.
In addition, BoJ Governor Masaaki Shirakawa is due to speak at an event in Nagoya.
Tuesday, November 27
The U.S. is to release official data on durable goods orders, a leading indicator of production, as well as industry data on house price inflation, an important indicator of demand in the housing sector.
In addition, the Conference Board is to publish data on U.S. consumer confidence, while Federal Reserve Chairman Ben Bernanke is to deliver brief remarks at the National College Fed Challenge Finals, in Washington D.C.
Wednesday, November 28
The U.S. is to release official data on new home sales, a leading indicator of economic health, as well as government data on crude oil inventories. Later Wednesday, the Fed is to publish its Beige Book.
Thursday, November 29
Japan is to publish official data on retail sales, the leading measure of consumer spending, which accounts for the majority of overall economic activity.
Later in the day, the U.S. is to produce revised data on third quarter gross domestic product, as well as data on pending home sales and initial jobless claims.
Friday, November 30
Japan is to publish official data on household spending, as well as a preliminary report on industrial production. The country is also expected to produce data on the unemployment rate and on consumer price inflation, which accounts for the majority of overall inflation.
Later Friday, the U.S. is to release government data on personal income, personal spending and core consumer inflation. The U.S. is also to publish official data on manufacturing activity in Chicago.
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