US dollar was trading higher against the Japanese yen on Monday, after showing a short slide to session lows during Asian trade, following a report to state that Japanese economy expanded less than projected during the second three months of the year.
USD/JPY bounced off its lowest point for todays session at 95.91, to trade at 96.84 at 7:31 GMT, showing a daily advance of 0.66%. Support for the cross was expected at August 8th low and a seven-week low, 95.79, while resistance was to be encountered at August 9th high, 96.95.
Earlier on Monday it became clear that Japanese economy slowed down its growth during the second quarter, missing preliminary estimates, as companies reduced investment costs for the sixth consecutive quarter. The reported numbers reflected the rising consumer and government expenditures, which favored the easing of deflationary processes in the country. The preliminary value of Japans Gross Domestic Product rose by an annual rate of 2.6% during the second quarter of the year, after the 3.8% expansion in the first quarter. Experts median estimate pointed a rise by 3.6%. During the second quarter of 2013 economy expanded by 0.6% in comparison with the first quarter, again below the expected 0.9% increase. This data puts in focus the debate over whether Japanese economy is resilient enough and can endure the planned increase by 3% of the tax on sales, awaiting endorsement by the countrys Prime Minister in the upcoming months.
Additionally, another report showed that Corporate Goods Price Index in Japan advanced 0.5% in July compared to June, after the 0.1% increase in June compared to May, while initial estimates pointed a 0.2% increase. The index of corporate goods prices climbed by an annual 2.2% in July, outpacing expectations of a 1.9% rise.
Meanwhile, the US dollar firmed its positions ahead of the retail sales report out of the United States on Tuesday, after having fallen to seven-week lows against the yen last week, following the disappointing non-farm payrolls report on August 2nd, which stated US economy added fewer than anticipated job positions during July. This made market players reassess their expectations, regarding the timing of Fed’s bond purchase pare back.
Japanese yen was trading lower against the euro, as EUR/JPY cross increased in value by 0.32% to 128.80 at 8:01 GMT. GBP/JPY pair was also gaining for the day, up by 0.37% to trade at 149.77 at 8:02 GMT. Ultimately, the Japanese currency has fallen 20% over the past 12 months, the worst-performing currency among 10 developed-nation currencies, tracked by Bloomberg Correlation-Weighted Indexes. The euro has advanced 11%, while the US dollar added 1.2%.
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