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Forex - USD/JPY weekly outlook: July 15 - 19

Posted: 7/14/2013 2:18:00 PM
Referenced Stocks: - The dollar was higher against the yen on Friday, after falling sharply in the previous two sessions after Federal Reserve Chairman Ben Bernanke indicated that the bank may not be as close to tapering its asset purchase program as previously believed.

USD/JPY fell to lows of 98.25 on Thursday; the lowest since June 27, before recovering to close at 99.22 on Friday, up 0.28% for the day, paring the week's losses to 1.68%.

The pair is likely to find support at 98.25, Thursday's low and resistance at 101.20, the high of July 10.

The dollar fell sharply on Wednesday after Bernanke said the Fed will continue to maintain accommodative monetary policy for the foreseeable future, citing low levels of inflation and the high unemployment rate.

Bernanke said the bank will not raise interest rates until the U.S. unemployment rate hits 6.5%.

The comments came after the minutes of the central bank's June policy meeting showed that Fed policymakers remain divided over when to begin tapering its USD85 billion-a-month asset purchase program.

Around half of Fed policymakers believe the bank should start to scale back bond purchases by the end of the year, while many others believe the labor market still remains too weak.

The yen was boosted after the Bank of Japan left monetary policy on hold following its policy setting meeting on Thursday, in a widely anticipated decision.

The BoJ also upgraded its assessment of the economy, saying it is starting to moderately recover.

Data on Friday showed that U.S. consumer sentiment ticked lower in July, with the University of Michigan's consumer sentiment index slipping to 83.9 from 84.1 in June, compared to expectations for a reading of 85.0.

Meanwhile, Philadelphia Fed President Charles Plosser said Friday the U.S. central bank should wind down its monetary stimulus program by the end of this year. Elsewhere, St. Louis Fed President James Bullard said the bank should not start tapering asset purchases if inflation remains weak.

In the week ahead, investors will be looking ahead to U.S. data on retail sales, consumer inflation and housing sector activity. Meanwhile, markets in Japan are to remain closed on Monday.

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

Monday, July 15

Markets in Japan are to remain closed for a national holiday.

The U.S. is to produce official data on retail sales, the government measure of consumer spending, which accounts for the majority of overall economic activity. The U.S. is also to publish the Empire state manufacturing index and a report on business inventories.

Tuesday, July 16

The U.S. is to release official data on consumer price inflation, industrial production and the capacity utilization rate.

Wednesday, July 17

The BoJ is to release the minutes of its latest policy meeting, which contain valuable insights into economic conditions from the bank's perspective.

The U.S. is to release official data on building permits, a leading indicator of future construction sector activity, as well as data on housing starts. The Federal Reserve is to release its Beige book.

Thursday, July 18

The U.S. is to release the weekly government report on initial jobless claims and the Philly Fed manufacturing index. - offers an extensive set of professional tools for the Forex, Commodities, Futures and the Stock Market including real-time data streaming, a comprehensive economic calendar, as well as financial news and technical & fundamental analysis by in-house experts.
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