US dollar on a 3.5-week high versus the yen

US dollar climbed to 3.5-week highs against the Japanese yen on Monday, supported by expectations that FED will take action, regarding its Quantitative Easing.

USD/JPY hit a session high at 99.72 at 7:32 GMT, pairs highest point since June 5th, after which consolidation followed at 99.58. The cross added 0.37% for the day. Support was likely to be found at June 28th low, 98.78, while resistance was to be encountered at June 5th high, 100.45.

US dollar was receiving ongoing support as a result of expectations that the Federal Reserve Bank will soon begin to scale back its Quantitative Easing. Market players were also looking forward to Friday’s non-farm payrolls report. Additionally, later on Monday the ISM was to release information on US manufacturing activity. Positive numbers will favor further boost of demand for the greenback.

Meanwhile, concerns over a slowdown in China appeared after the release of mixed manufacturing data. Official report announced that Chinese PMI stood at 50.1 in June, following the reading of 50.8 a month ago. On the other hand, Chinese HSBC manufacturing PMI dropped to a 9-month low at 48.2 in June, continuing to slide, as in May the index showed 48.3. Both results were below the 50.0 level, which divides contraction from expansion.

Additionally, it became clear that large manufacturers confidence in Japan has become optimistic for the first time since September 2011, thus they support the reflationary policy by Japanese PM Abe, despite stock market volatility. Tankan summary for large manufacturing enterprises showed a rise of confidence to +4 in June from -8 during March. A positive value is a signal that number of optimists exceeds the number of pessimists. Tankan summary for large non-manufacturing enterprises stated that confidence increased to +12 in June from +6 in March. Experts had projected a value of +11.

Elsewhere, Japanese yen retreated against the euro, as EUR/JPY rose by 0.45% to 129.57.