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Forex - USD/JPY drops as market views yen as oversold

CommoditiesDec 14, 2012 03:03PM ET
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This article has already been saved in your Saved Items - The dollar dropped against the yen on Friday after market participants viewed the Japanese currency as oversold.

The dollar hit 9-month highs in recent trading on sentiment that the Japanese political opposition under Shinzo Abe will win Sunday's elections and usher in a period of looser monetary policies.

In U.S. trading on Friday, USD/JPY was trading at 83.45, down 0.24%, up from a session low of 83.32 and off a high of 83.96.

The pair was likely to find support at 82.32, the earlier low, and resistance at 83.96, the earlier high.

The yen has slumped in recent sessions on growing market sentiments that Shinzo Abe, the country’s Liberal Democratic party candidate and champion of loosening monetary policies to stimulate the economy, will become the next prime minister.

Elsewhere, two Japanese economic indicators fell short of expectations.

The Tankan Large Manufacturers Index came in below expectations at -12, off from consensus forecasts for a -10 reading, while the Tankan Non-Manufacturers Index came in at 4, missing analysts' calls for a 5 figure.

The dollar, meanwhile, slid on solid U.S. economic data, which fueled appetite for risk.

The Federal Reserve reported earlier that U.S. industrial production beat expectations in November, expanding 1.1% after a 0.7% decline in October.

Analysts had expected industrial production to rise 0.3% in November.

Elsewhere, the Markit research group reported that the U.S. manufacturing purchasing managers' index climbed to a preliminary 54.2 in December, its best performance since April, from 52.8 in November, beating market forecasts for a decline to 52.6.

Meanwhile, the U.S. Bureau of Labor Statistics reported earlier that the country's consumer price index decreased by 0.3% in November from October, more than expectations for a 0.2% contraction and off from a 0.1% rise the previous month.

The U.S. core consumer price index, which excludes more volatile food and energy costs, rose 0.1% last month, missing expectations for a 0.2% rise and off from a 0.2% increase in October.

The yen, meanwhile was down against the pound and down against the euro, with GBP/JPY up 0.10% and trading at 134.92 and EUR/JPY trading up 0.36% at 109.78.

Forex - USD/JPY drops as market views yen as oversold

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