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

Shutterstock photo - The yen hit the lowest level against the U.S. dollar since July 2010 on Friday, as investors continued to shun the Japanese currency amid ongoing expectations for more aggressive easing measures by the Bank of Japan.

USD/JPY hit 88.40 on Friday, the pair's highest since July 15 2010; the pair subsequently consolidated at 88.12 by close of trade, up 2.64% for the week.

The pair is likely to find support at 87.22, Friday's low and resistance at 89.40, the high of June 29 2010.

The yen remained under heavy selling pressure amid expectations that Japan's new government will pressure the BoJ to ease policy more aggressively in order to spur growth and combat deflation.

The dollar pared some gains against the yen after government data on U.S. nonfarm payrolls indicated that the recovery in the labor market may be slowing.

The U.S. Department of Labor said the economy added 155,000 jobs in December, slightly higher than forecasts for an increase of 150,000, but easing from an upwardly revised increase of 161,000 in November. The unemployment rate held steady at 7.8%.

The data came one day after the minutes of the Federal Reserve's December policy meeting showed that some policymakers considered an earlier-than-expected end to the bank's quantitative easing program.

The Fed's December minutes said also interest rates would remain close to zero "at least as long" as the jobless rate remains above 6.5%.

In the week ahead, investors are likely to remain focused on U.S. political wrangling over fiscal policy, with negotiations raising the U.S. debt ceiling still to come.

Ahead of the coming week, has compiled a list of significant events likely to affect the markets.

Monday, January 7

Japan is to publish official data on monetary base, which is closely linked to interest rates.

Tuesday, January 8

The U.S. is to release private sector data on economic optimism, as well as official data on consumer credit, which is closely linked to consumer spending.

Wednesday, January 9

The U.S. is to publish official data on crude oil inventories, while the U.S. Treasury is to hold an auction of 10-year government bonds.

Thursday, January 10

The U.S. is to publish the weekly government report on initial jobless claims.

Friday, January 11

Japan is to release official data on the current account, which is directly linked to currency demand.

The U.S. is to round up the week with the government's report on the trade balance, the difference in value between imports and exports. - 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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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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