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USD/JPY advanced after Japanese GDP and Olympics winning bid

yen-dollarUS dollar gained ground against the Japanese yen on Monday, following the upbeat GDP report out of Japan, while Tokyo’s winning bid to host the Olympics in 2020 bolstered optimism in Japanese Prime Minister Shinzo Abe’s fiscal and monetary measures.

USD/JPY climbed to a session high at 100.09 during the early phase of Asian trade, after which consolidation followed at 99.71, gaining 0.64% on a daily basis. Support for the pair was likely to be found at September 2nd low, 98.26, while resistance was to be encountered at September 6th high, 100.21.

On Monday an official report said that Japanese final Gross Domestic Product rose by 3.8% during the second quarter of the year compared to Q2 2012, following the 2.6% advance, according to initial estimates, published in August. The GDP figure was favored by stable capital investments. This could provide a certain support for governments plans of increasing the tax on sales during the spring of 2014. The yen shows a tendency to strengthen during periods of financial and political uncertainty, because Japan does not rely on foreign capital to fund its deficits. However, Japanese currency also tend to lose ground on positive economic news, especially if expectations that investors will position themselves in higher-yielding assets appear.

In addition, Japans Ministry of Finance reported that countrys current account recorded a surplus of 0.333 trillion JPY in July, according to seasonally adjusted data, while in June the surplus amounted at 0.646 trillion JPY. Preliminary estimates pointed a surplus of 0.340 trillion JPY.

Tokyo has won the 2020 Olympics host role to Madrid and Istanbul, the International Olympic Committee said on September 7th in Buenos Aires. Japanese PM Abe said yesterday at a TV press conference that the games would influence positively a wide range of areas, such as infrastructure and tourism. “Victory for Tokyo’s Olympics bid is seen as helping to renew faith in Abe and his efforts to reflate the economy,” said Mike Jones, a currency strategist in Wellington at Bank of New Zealand Ltd., cited by Bloomberg. “That’s weighing on the yen.” It is going to be the fourth time Japan hosts the Olympic games.

Elsewhere, the yen was lower against the euro, with EUR/JPY cross advancing 0.44% to trade at 131.12 at 6:51 GMT. GBP/JPY pair was gaining 0.48% on a daily basis to trade at 155.62 at 6:52 GMT.

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