US dollar was little changed against the Japanese yen on Wednesday, as positive Japanese PMI supported the yen, while expectations of a near-term scale back of the Federal Reserve Banks Quantitative Easing continued underpinning demand for the greenback.
USD/JPY reached a session high at 99.79 at 6:04 GMT, after which consolidation followed at 99.60, with the pair recording a 0.01% uptick for the day. Support was likely to be found at September 3rd low, 99.16, while resistance was to be encountered at July 25th high, 100.44.
On Tuesday a report by the ISM showed that manufacturing activity index in the United States increased to 55.7 in August, or the fastest rate of increase since April 2011, exceeding preliminary estimates of a value of 54.0, while in July the index stood at 55.4. Also, Markit research group said that the final value of the US manufacturing PMI decreased to 53.1 in August from the initially estimated value of 53.9 in the middle of the preceding month. These data points strengthened the view of a possible reduction of scale of stimulus by the US central bank at its meeting on September 17-18th.
US non-farm payrolls report was scheduled for release on Friday, as it may prove crucial for Feds policy decision this month.
Meanwhile, Japanese business activity index in services advanced to 51.2 in August from 50.6 in July, marking its tenth consecutive month in the zone pointing expansion. This was the longest period of sustained growth since the beginning of record in September 2007. The higher volumes of new orders was the key component that contributed to this result, according to Markit. “The modest recovery of growth evident in the service sector was complemented by the manufacturing industry data, as goods producers recorded the fastest rise in output since February 2011. As a result, the Composite Output Index rose from July’s reading of 50.7 to a level of 51.9 in August.”, the research group also said, cited by Investing.com. USD/JPY pair lowered slightly, right after the release of this data.
Elsewhere, the Japanese currency was little changed against the euro, as EUR/JPY cross ticked up 0.04% to trade at 131.21 at 8:52 GMT. GBP/JPY pair, on the other hand, rose by 0.28% on a daily basis to trade at 155.38 at 8:53 GMT.
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