US dollar managed to climb to two-and-a-half week highs versus the Japanese yen on Friday, ignoring optimistic economic data, that came out from Japan and as safe haven demand for the yen was reduced on surge of Chinese and Japanese shares.
USD/JPY hit a session high at 98.94 at 2:27 GMT, after which consolidation followed at 98.84. The pair was still up by 0.51% for the day. Support was expected at June 27th low, 97.56, while resistance was to be encountered at June 6th high, 99.46.
Earlier on Friday it became clear that Japanese Industrial Production rose by 2% in May on a monthly basis, above projections of a 0.2% increase, following the 0.9% rise in April. This was the fastest pace of increase since December 2011. It became clear, that energy demand boosted these results.
Monthly Retail Sales in Japan rose by 1.5% in May, surpassing preliminary estimates of a 0.8% rise, and extending in comparison with Aprils results, a 0.6% increase, which was a revision down from 0.7% previously.
Unemployment Rate remained stable in May, at 4.1%, slightly above the projected 4.0%, as the indicator stood at 4.1% during April as well.
JMMA Japan Purchasing Managers Index (PMI) rose to a reading of 52.3 in June from a value of 51.5 a month ago. The index registered its fastest rate of growth in almost 2 years.
Additionally, Housing Starts in Japan climbed 14.5% during May, far above the expected 6.2% rise. The indicator posed a 5.8% rise in the previous month.
All these major indicators supported the efforts by Japanese PM Abe in his struggle with continuous deflationary processes.
Japanese shares surged while Chinese equities climbed for the first time in eight days, as People’s Bank of China Governor Zhou Xiaochuan stated banks efforts to preserve money market stability. “The correlation between stock gains and yen weakness is strengthening,” said Junichi Ishikawa, an analyst at IG Markets Securities Ltd. in Tokyo, cited by Bloomberg. “There will still be some concern over China until there is proof that the liquidity squeeze hasn’t hurt growth.”, he added.
The MSCI World Index of stocks recorded gains for a fourth consecutive day, trimming its June decline to about 2% as a result of aroused fears of a cash shrinkage in China and prospects for scaled back stimulus program in the United States. The Shanghai Composite Index added 0.9% on Friday, while Japanese Topix index surged 3.4%. “The safe-haven support for the yen is fading,” New-York based BNP Paribas SA currency strategists Vassili Serebriakov and Daniel Katzive wrote in a research note, Bloomberg imparted. “We continue to see significant gains in dollar-yen over the next six months targeting 108 by year-end.”, as added in the note.
Meanwhile, US data, released on Thursday, bolstered uncertainty over the future moves by FED. US Personal Spending rose by 0.3% in May in line with preliminary estimates. Core Personal Consumption Expenditures (PCE) Price Index registered the same rate of increase in May 2013, compared to May 2012, 1.1%, as was during the preceding period.
Ultimately, Initial Jobless Claims in the country decreased to 346 000 during the week, ending on 22.06.2013, while experts had projected that claims would fall to 345 000.
Japanese yen was on lower levels against the euro as well, with EUR/JPY cross rising by 0.59% to 128.98.
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