USD/JPY on one-week highs

dollar-yen2US dollar advanced to its highest point in one week against the Japanese yen on Thursday, amid signs of a compromise among US lawmakers, that could avert an unprecedented default and after the release of the minutes of FOMC most recent meeting on policy.

USD/JPY reached a session high at 97.83 at 5:00 GMT, also the pairs highest point since October 3rd, after which consolidation followed at 97.64, rising 0.29% for the day. Support was likely to be received at October 9th low, 96.81, while resistance was to be met at October 3rd high, 97.88.

The minutes of FOMC meeting said that most policymakers expressed their support of central bank’s intention to reduce the pace of its 85-billion-USD-per-month asset purchases this year. However, experts suggested that the bank will probably not make such a move at its meeting in October, as Chairman Ben Bernanke has not scheduled a press conference due to the partial US government shutdown. Most analysts expect that a possible scale back to Federal Reserve’s monetary stimulus could occur in December.

At the same time, House Republican and Senate Democratic leaders are open to a short-term increase in the US debt ceiling, according to congressional aides of both parties. This development came, after House Democrats met with President Barack Obama at the White House. The US borrowing authority is expected to lapse no later than October 17th, while Republicans are in pursuit of spending cuts and changes to the nation’s 2010 health-care law. “As soon as you start to see signs of an agreement being reached on the debt ceiling, I think you see dollar-yen fly back up to 99 pretty quickly,” said Thomas Averill, a managing director in Sydney at Rochford Capital, cited by Bloomberg.

Also, US President Barack Obama officially nominated Fed Vice Chairman Janet Yellen for the post of bank’s Chairman. Yellen will be the first lady to take such a position in central bank’s 100-year history.

Meanwhile, in Japan, a report showed that machine orders in countrys private sector rose 5.4% in August on a monthly basis, marking their first climb during the past three months, after orders remained flat in July. These results significantly outstripped analysts estimates that machine orders will rise 2.5%. Core machine orders, which exclude volatile components such as orders in the sectors of shipbuilding and electronics, increased to 819.3 billion JPY in the month of August, or the highest level in five years. Better results have been contributed mostly by single orders by refineries. In annual terms, machine orders climbed 10.3% in August, again exceeding expectations of a 8.5% increase.

Another report revealed that Japanese tertiary industry increased its business activity in August, as the corresponding index climbed 0.7% in the month of August compared to July, completely neutralizing the 0.4% drop, registered a month ago. Preliminary estimates pointed a 0.4% increase.

Bank of Japan Governor Haruhiko Kuroda is scheduled to take a statement today at the Council on Foreign Relations in New York. In April, he proposed a program to purchase more than 7 trillion JPY (71.6 billion USD) of Japanese government bonds per month in order to force the index of consumer prices up to 2% within period of two years.

Elsewhere, the yen was lower against the euro, as EUR/JPY cross rose 0.32% on a daily basis to trade at 132.10 at 8:28 GMT. In addition, GBP/JPY pair was gaining 0.33% to trade at 155.85 at 8:29 GMT.

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