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Forex - USD/JPY edges higher as Noda pledges “bold action”

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Forexpros - The U.S. dollar edged higher against the yen on Monday, after Finance Minister Yoshihiko Noda pledged to take "bold action" to curb gains in the yen, signaling that Tokyo was considering further action to weaken the currency.

USD/JPY hit 77.09 during late Asian trade, the highest since August 11; the pair subsequently consolidated at 76.86, gaining 0.22%.

The pair was likely to find support at 76.29, the low of August 11 and short-term resistance at 77.30, the high of August 10.

Japanese Finance Minister Yoshihiko Noda sharpened his verbal warnings to markets over the weekend, saying that he will continue to "closely watch the markets and take bold action if it becomes necessary."

Meanwhile, preliminary data released earlier Monday showed that Japan's economy contracted less-than-expected in the second quarter, signaling the country is rebounding from March's earthquake disaster.

Japan's gross domestic shrank by 0.3% in the second quarter, or 1.3% on an annualized basis.

Analysts had expected Japan's economy to contract by 0.9% in the quarter, or 2.5% on an annualized basis.

Speaking following the release of the data, Noda said the nation's economy was likely to return to growth in the third quarter, but warned that the yen's strength posed as a downside risk to the recovery.

"There is a strong possibility the economy will return to growth in the July-September period, but there are factors posing downside risks to the economy, such as the yen's strength, so we must carefully steer economic policy," Noda said.

Elsewhere, the yen was also lower against the euro, with EUR/JPY climbing 0.61% to hit 109.96.

Later in the day, the U.S. was to produce official data on manufacturing activity in New York State and a report on the balance of domestic and foreign investment in the U.S.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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