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USD/JPY falls to two-week lows ahead of US consumer confidence data

dollar-yen2US dollar slid to its lowest point in two weeks against the Japanese yen before the release of the University of Michigan consumer confidence report, which is expected to show the corresponding index fell to its lowest level since January in October.

USD/JPY fell to a session low at 96.94 at 4:30 GMT, also the pairs lowest point since October 9th, after which consolidation followed at 97.08, still down 0.21% for the day. Support was likely to be received at October 9th low, 96.92, while resistance was to be met at October 24th high, 97.61.

Earlier on trading Friday the Japanese Statistics Bureau reported that nations consumer price index (CPI) rose 0.3% in September on a monthly basis, retaining the rate of increase a month ago. The annual index of consumer prices advanced to 1.1% in September from 0.9% in August, while expectations pointed that it will remain at 0.9% in September.

The core consumer price index, which excludes prices of fresh food, remained steady at 0.7% in September on annual basis in consonance with preliminary estimates. Augusts CPI has been revised down to a 0.7% gain from a 0.8% gain previously.

The annual consumer price index (CPI) for Ku-area of Tokyo advanced to 0.6% in October from 0.5% a month ago, while the core CPI for Ku-area of Tokyo rose to 0.3% in October annually, meeting expectations, from 0.2% in September.

“The momentum is still on,” Takuji Okubo, the chief economist at Japan Macro Advisors in Tokyo, said of Japan’s consumer inflation data, cited by Bloomberg. “If the Japanese economy can keep growing, say for another 12 months, there’s a very good chance Japan can be on a very good track of eliminating deflation.”

Japan is considering what amount of its 1.2 trillion USD in foreign-exchange reserves it will allocate for management by financial institutions operating in the private sector, according to Japanese Finance Minister Taro Aso. The purpose of such a move was generating profits on holdings.

Meanwhile, according to the median estimate by experts, the Thomson Reuters/University of Michigan index of consumer confidence for the United States probably decreased to a reading of 75.0 in October, marking the lowest point since January, after in September the index came in at 77.5. The preliminary value for October was 75.2.

At the same time, the United States will release a separate report on durable goods orders, which comprise the most of nations overall factory orders. Experts project a 2.0% increase in September compared to August, when the indicator increased 0.1%. Better than anticipated results will certainly provide support to the US dollar.

Yesterday the US Department of Labor reported that the number of people who filed for unemployment assistance in the country decreased by 12 000 to reach 350 000 during the week ended on October 19th 2013. Preliminary estimates pointed that the number of initial jobless claims will drop to 340 000, while preceding week’s results have been revised up to 362 000 from 358 000 previously.

According to another report, US manufacturing activity increased at the slowest pace during the past one year in October, as factory output contracted for the first time since the fall of 2009. Markit Economics said, that the preliminary value of the manufacturing PMI decreased to 51.1 in October, reaching its lowest level since October 2012, as in September the PMI stood at 52.8.

Elsewhere, the yen was higher against the euro and the pound, as EUR/JPY cross lost 0.16% on a daily basis to trade at 134.05 and the GBP/JPY pair lost 0.19% to trade at 157.34.

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