USD/JPY higher after US sector of services showed increased activity

US dollar traded on higher levels against the Japanese yen on Tuesday, following the upbeat US ISM non-manufacturing report, released yesterday, as market participants continued to expect the possible pare back of stimulus by the Federal Reserve by the end of this year.

USD/JPY reached its highest point today at 98.57 at 7:05 GMT, after which consolidation followed at 98.45. Support was likely to be found at August 1st low, 97.64, while resistance was to be encountered at August 1st high, 99.56.

The greenback managed to regain positions against the yen after on Monday the Institute for Supply Management (ISM) said that the index of activity in the sector of services in the United States rose to a reading of 56.0 in July, reaching a five-month high, significantly outstripping estimates of a value of 53.1. This data came in consonance with the released report on Friday on Non-Farm Payrolls, as it increased by 162 000 job positions in July, while preliminary estimates pointed an increase by 184 000 jobs. In addition, the unemployment rate in the United States decreased by 0.2% to 7.4% in July, reaching its lowest level since December 2008, while projections pointed a slighter decrease to 7.5%.

Meanwhile, in Japan the leading index came in at lower value in June, 107.0, slightly below the expected 107.3, as in May this indicator advanced to a reading of 110.7. On the other hand, the coincident index, which is usually released several months after the leading index and completely match the business cycle, showed a value of 105.2 in the month of June, as in May its stood at 106.0. Higher values of the coincident index are a signal that economy is moving upward.

Elsewhere, the yen was trading lower against the euro, as EUR/JPY cross added 0.16% to 130.57 at 9:00 GMT. GBP/JPY pair was also gaining for the day, up by 0.20% to trade at 151.29 at 9:01 GMT.