US dollar continued to trade lower against the Japanese yen on Tuesday, after sliding to nearly one-week lows, as a result of the pressured demand for the greenback, following the disappointing existing home sales report, released yesterday.
USD/JPY fell to a session low at 99.15 at 0:00 GMT, the lowest point since July 17th, after which the pair regained positions, trading at 99.49 at 7:40 GMT, still down by 0.19% for the day. Support was expected at July 17th low, 98.88, while resistance was to be met at July 22nd high, 100.61.
The dollar remained broadly weak after on Monday an official report showed Existing Home Sales in the United States recorded an unexpected drop in June. Sales decreased by 1.2% to a seasonally adjusted annual level of 5.08 million units during June, which was the second highest level since November 2009. In May the sales figure was revised down to 5.14 million units from 5.18 million units previously. Experts had projected an increase to 5.25 million homes. This data dimmed the prospects of a possible scale back of Federal Reserve Bank’s stimulus program this year.
“The housing market is directly linked to the job market, and Bernanke says hiring must improve before the Fed can reduce stimulus,” said Yuji Saito, the director of foreign-exchange at Credit Agricole SA in Tokyo, cited by Bloomberg. “The Fed has succeeded in convincing markets there’s going to be quite some time between the end of tapering and the start of policy tightening, pushing the dollar lower against the yen.”, he also said.
Meanwhile, the Japanese government announced today, that it will revise up its assessment of economic conditions in the country for a third consecutive month in July, citing the improvement in Japanese industrial production, increasing capital investments and signs of deflation easing off. In its monthly report the government also said that “areas of self-sustaining recovery can be observed.” Assessment of capital investments was also revised, as, according to the report, business investments in Japan remained stable, showing signs of revitalization. This forecast showed a bit more optimism, compared to the preceding one, when capital asset expenditures rebounded for the first time from the levels, pointing stagnation.
Elsewhere, the yen was higher versus the euro as well, with EUR/JPY pair erasing 0.14% to 131.25.
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