USD/JPY sharply reverses, trades downtrodden After trading noticeably higher earlier in Friday’s Asian session, the U.S. dollar sold-off against the Japanese yen to trade lower against the Japanese currency. In Asian trading Friday, USD/JPY fell 0.13% to 100.30 after earlier trading as high as 100.87. The pair was likely to find support at 99.03, Wednesday’s low and resistance at 101.20, the high of July 10. The greenback turned in a strong showing against the yen during Thursday’s U.S. session, soaring 0.74% after Federal Reserve Chairman Ben Bernanke said in congressional testimony the central bank could scale back its asset purchases if the economy continues to improve, but added that there was no “preset course.” Bernanke said the bank’s bond purchase program could be tapered at a faster pace, slower pace or even temporarily increased depending on economic and financial developments. The dollar was supported by a pair of bullish data points. In U.S. economic news out Thursday, the U.S. Labor Department said initial claims for jobless benefits slid by 24,000 to 334,000 last week. The less volatile four-week moving average dropped by 5,250. The Federal Reserve Bank of Philadelphia said that its manufacturing index rose 19.8 in the current month from June’s reading of 12.5. Analysts had expected the index to decline to 7.8. The USD/JPY reversal Friday comes after the yen hit seven-week lows against the dollar and euro Thursday, so Friday’s trade could be a case of short-covering or bargain hunting in the yen. Traders are also looking toward this weekend’s elections that will decide control of Japan’s upper house of parliament. It is widely expected that Prime Minister Shinzo Abe’s Liberal Democratic Party will gain control of the upper house. A win by the LDP could give Abe room to initiate more bold economic reforms and further depress the yen. Further yen easing could lower Japanese bond yields, forcing Japanese investors to sell those bonds in favor higher-yielding overseas assets. Elsewhere, EUR/JPY inched down 0.02% to 130.66 while AUD/JPY was flat at 92.12
Posted on: Fri, 19 Jul 2013 05:40:51 +0000
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