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Forex - USD/JPY weekly outlook: February 28 - March 04

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Forex Pros - Last week saw the yen post its largest weekly gain against the U.S. dollar this year, amid increased demand for safe haven assets as escalating violence in Libya drove crude oil prices to 29-month high, sparking concerns over global economic growth.

USD/JPY hit 81.61 on Thursday, the pair's lowest since February 4; the pair subsequently consolidated at 81.65 by close of trade on Friday, tumbling 1.69% over the week.

The yen's gains came amid fears that the spike in oil prices could hit U.S. consumer spending and create a drag on the global economic recovery.

Crude oil for April delivery in New York climbed to its highest level since September 2008 on Thursday; topping USD103 a barrel amid concern supplies would be disrupted. It later slipped to USD97.28 a barrel.

The greenback remained under pressure after revised data on Friday showed that fourth-quarter U.S. gross domestic product came in weaker-than-expected. The Commerce Department said GDP rose at an inflation-adjusted annual rate of 2.8%, less than the expected 3.3% gain.

In the week ahead, any further escalation of geopolitical tensions in North Africa and the Middle East could continue to weigh on market sentiment while U.S. jobs data for February, due Friday, will also be a major focus for markets. Meanwhile, Japan is to publish data on retail sales and industrial production.

Ahead of the coming week, Forex Pros has compiled a list of these and other significant events likely to affect the markets.

Monday, February 28

The U.S. is to kick off the week by releasing a flurry of data, with industry data on pending home sales as well as a report on manufacturing activity in the in the Chicago area. The U.S. is also to publish official data on personal consumption expenditure and consumer price inflation.

Also Monday, Japan is to publish government data on retail sales, the primary gauge of consumer spending, which accounts for the majority of overall economic activity as well as preliminary data on industrial production.

Tuesday, March 1

In the U.S., the Chairman of the Federal Reserve, Ben Bernanke, is to testify on the semi-annual monetary policy report before the Senate Banking Committee, in Washington. His comments will be closely scrutinized for clues to the future possible direction of monetary policy. Meanwhile, the Institute for Supply Management is to publish a report on manufacturing activity.

Japan is to publish official data on average cash earnings, which correlates with consumer spending.

Wednesday, March 2

In the U.S., Ben Bernanke is to testify for a second day before the Senate Banking Committee. Meanwhile, the Fed is to publish its Beige Book, which contains data policymakers examined before making their interest rate decision.

The country is also to publish data on private sector payrolls compiled by payroll processing firm ADP, which heads up government data by two days, as well as a report on crude oil stockpiles.

Also Wednesday, Japan is to publish government data on capital spending, a leading indicator of economic health.

Thursday, March 3

The U.S. is to release its key weekly report on initial jobless claims, a leading indicator of overall economic health. The country is also to publish revised data on nonfarm productivity, as well as a report on service sector activity, while Fed chair Ben Bernanke is to speak at a public engagement.

Friday, March 4

The U.S. is to round up the week with a closely watched report on non-farm payrolls, a leading indicator of job creation. The country is also to publish government data on the rate of unemployment, average hourly earnings as well as factory orders.

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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.

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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