Investing.com - The U.S. dollar rose to its highest level in just over six years against the yen on Friday as expectations that the Federal Reserve is growing closer to raising interest rates continued to underpin investor demand for the greenback.
USD/JPY was up 0.23% to 107.33, the highest level since October 2008 in late trade. For the week, the pair added 2.05%.
The pair was likely to find support at the 106.50 level and resistance at around 108.25.
Expectations that the Federal Reserve is growing closer to raising interest rates continued to boost the dollar against the yen, with the Japanese central bank likely to stick to a looser monetary policy stance.
A study by the San Francisco Fed published on Monday indicated that central bank officials see rates rising sooner than markets expect.
The Fed was expected to cut its asset purchase program by another $10 billion at its upcoming policy meeting next week which would keep it on track for winding up the program in October, and to start raising interest rates sometime in mid-2015.
Data on Friday showing that U.S. retail sales rose in August and another report showing that consumer sentiment rose to a 14-month high in September underlined the view that the economic recovery is deepening.
The yen remained under pressure after Bank of Japan Governor Haruhiko Kuroda said Thursday that the bank would be prepared to immediately loosen monetary policy or implement other measures if its 2% inflation target becomes difficult to meet.
Earlier in the week official data showed that Japan’s second quarter economic contraction was larger than initially estimated, and another report showed that the country’s current account surplus fell short of expectations in July.
The lackluster data indicated the economy is struggling to gain momentum and fuelled expectations for more stimulus from the BoJ.
The euro rose to two month highs against the weaker yen on Friday, with EUR/JPY up 0.56% in late trade. For the week the pair gained 2.17%.
In the week ahead, investors will be focusing on the outcome of Wednesday’s Fed policy meeting. Fed Chair Janet Yellen was to hold a press conference following the meeting.
Japan is to release what will be closely watched trade data on Thursday.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets. The guide skips Friday as there are no major events on this day.
Monday, September 15
Markets in Japan are to remain closed for a national holiday.
The U.S. is to release reports on manufacturing activity in the Empire State and industrial production.
Tuesday, September 16
The U.S. is to produce data on producer price inflation.
Wednesday, September 17
The U.S. is to produce data on consumer prices. Later Wednesday, the Federal Reserve is to announce its federal funds rate and publish its rate statement. Fed Chair Janet Yellen is to hold a press conference following announcement.
Thursday, September 18
Japan is to release data on the trade balance, the difference in value between imports and exports.
The U.S. is to produce a flurry of economic data, including reports on initial jobless claims, building permits, housing starts and manufacturing activity in the Philadelphia region.