USD/JPY with daily gains before Fed meeting

US dollar remained higher against the Japanese yen on trading Friday, as markets awaited the series of US data later in the day and the two-day meeting on policy by the Federal Reserve Bank next week.

USD/JPY reached a session high at 99.97 at 5:25 GMT, after which consolidation followed at 99.74, gaining 0.18% for the day. Support was likely to be received at September 6th low, 98.55, while resistance was to be met at September 11th high, 100.61.

The Federal Reserve Bank is expected to decelerate its monthly asset purchases to 75 billion USD from the current pace of 85 billion USD at its September 17-18th meeting, according to the median estimate of experts, surveyed by Bloomberg News on September 6th.

In the mean time, Bank of Japan’s (BoJ) unprecedented bond purchases, striving to reach an inflation objective of 2% in two years, combined with the Federal Reserve’s pare back of monthly asset purchases, was putting pressure on the Japanese currency, said Axel Merk, who oversees about 635 million USD of currencies as founder and president of Palo Alto, California-based Merk Investments, as imparted by Bloomberg.

What is more, the USD/JPY cross may probably reach 103 by December 31st, according to the median estimate in a Bloomberg survey, based on Royal Bank of Canada’s forecast for 92 as the most bullish for Japanese currency among 63 estimates, while Ebury Partners Ltd. and UniCredit SpA (UCG) forecast that the pair will advance to 115.

Japanese Prime Minister Shinzo Abe and BoJ Governor Haruhiko Kuroda have implemented a bond-buying program to facilitate the struggle with years-long deflation in the country. Shinzo Abe will probably decide on October 1st whether to raise the sales tax to 8% in April 2014 from the current 5%, according to Minister of Economy Akira Amari. Japanese government revised up its estimate for countrys economic development, due to the greater amount of business investments and improving economic data, that came out of China earlier in the week. Economy has begun to recover at a moderate pace, according to government officials. However, governments estimate for export and consumption was revised down, according to a monthly report in September. The outlook over price development in Japan remained unchanged, as it was reported that deflationary period was meeting its end.

Last but not least, the final reading of the index of industrial production in Japan improved by 3.4% in July on a monthly basis, following the 3.2% gain, registered in June. The annual performance of the index revealed a 1.8% advance in the month of July, after the 1.6% advance a month earlier, while projections of a 1.3% gain were obviously outpaced.

Meanwhile, the yen was lower against the euro, as EUR/JPY cross added 0.11% to trade at 132.55 at 8:04 GMT. GBP/JPY pair was also gaining for the day, up by 0.17% to trade at 157.65 at 8:05 GMT.