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Forex - USD/JPY weekly outlook: April 7 - 11

Published 04/06/2014, 06:06 AM
Updated 04/06/2014, 06:06 AM - The dollar fell against the yen on Friday, after a report showing that the U.S. economy added slightly fewer than expected jobs in March, but the data was unlikely to sway the Federal Reserve from its current timetable for reductions to its stimulus program.

USD/JPY fell 0.63% to end Friday’s session at 103.27, after hitting session highs of 104.13 immediately following the release of the jobs report, the strongest level since January 23.

The pair was likely to find support at 103.00 and resistance at 104.11.

The Labor Department reported Friday that the U.S. economy added 192,000 jobs in March, below expectations for jobs growth of 200,000. February’s figure was revised up to 197,000 from a previously reported 175,000. The U.S. unemployment rate remained unchanged at 6.7%, compared to expectations for a tick down to 6.6%.

The data disappointed some market expectations for a more robust reading but indicated that the U.S. central bank is likely to stick to the current pace of reductions to its asset purchase program.

The yen fell to 10-week lows against the dollar earlier Friday as risk appetite continued to be underpinned by hopes that China will implement economic stimulus measures to shore up slowing growth.

The yen also came under pressure after Japan’s sales tax increase to 8% from 5% came into effect on Tuesday. The increase is expected to present a challenge to the Bank of Japan’s attempts to bolster economic growth and stave off deflation.

Elsewhere, the yen was sharply higher against the euro on Friday, with EUR/JPY dropping 0.73% to close at 141.54. For the week, the pair lost 0.44%.

The shared currency weakened broadly after the European Central Bank said Thursday it would use unconventional measures if necessary to stave off the risk of deflation in the euro zone.

ECB President Mario Draghi said the governing council was "unanimous" in its commitment to using all unconventional instruments within its mandate to cope with the risk of low inflation becoming entrenched. He added that the bank discussed the possibility of negative deposit rates. The comments came after the bank left rates on hold at a record low 0.25%.

In the week ahead, markets will be focusing on Wednesday’s minutes of the Fed’s most recent policy setting meeting, while Tuesday's BoJ policy setting meeting will also be closely watched.

Ahead of the coming week, has compiled a list of these and other significant events likely to affect the markets. The guide skips Monday as there are no relevant events on this day.

Tuesday, April 8

The BoJ is to announce its benchmark interest rate and publish its monetary policy statement, which outlines economic conditions and the factors affecting the bank’s decision. The announcement is to be followed by a press conference. Japan is also to publish data on the current account.

Wednesday, April 9

The Federal Reserve is to publish what will be the closely watched minutes of its latest policy meeting.

Thursday, April 10

Japan is to produce a report on core machinery orders.

In the U.S., the Labor Department is to release its weekly report on initial jobless claims.

Friday, April 11

The BoJ is to publish monetary policy meeting minutes.

The U.S. is to round up the week with data on producer price inflation and the preliminary report on the University of Michigan’s consumer sentiment index.

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