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USD/JPY rises after BoJ Deputy Governor Iwata’s statement

Yen1US dollar traded higher against the Japanese yen on Monday, after Deputy Governor Kikuo Iwata reiterated Bank of Japan’s pledge to continue the course of a massive monetary easing.

USD/JPY touched a session high at 97.70 at 6:05 GMT, after which consolidation followed at 97.65, rising 0.25% for the day. Support was likely to be received at October 7th low, 96.66, while resistance was to be met at October 18th high, 98.16.

Bank of Japan will continue to purchase bonds until it achieves its 2% inflation objective, Deputy Governor Iwata said on Sunday in Shimonoseki, Japan. Nation’s monetary and fiscal policies remained of critical importance for ending deflation, according to Bloomberg. BoJ officials are expected to conduct a one-day meeting on October 31st.

The USD/JPY cross will end this year at 100.00 and reach 110.00 at the end of 2014, according to median estimates of experts participated in a survey by the same media.

In the mean time, Federal Reserve Bank policymakers will meet on October 29th-30th. Analysts project that Fed officials will abstain from trimming the monthly pace of banks stimulus program this month and wait until March 18th-19th. According to projections the quantitative easing may be pared to 70 billion USD per month from the current 85 billion USD per month.

Later in the day the United States will report on the index of industrial production. Preliminary estimates pointed that it rose 0.4% in September, retaining the monthly rate of increase from August.

This report will be followed by another, encompassing the pending home sales in the United States, an indicator providing clues about future activity in the housing sector. The median estimates pointed a 0.5% increase in September compared to August, when sales declined 1.6%. Better than expected results will certainly heighten the appeal of the greenback.

Elsewhere, the Japanese currency extended its three-week loss against the euro, as EUR/JPY cross gained 0.17% on a daily basis to trade at 134.73 at 6:52 GMT. The index, gauging consumer confidence in France, probably advanced to a value of 86 in October, which would mark the level reached in February this year, according to the median estimate in another survey. The official data is scheduled for release tomorrow.

In addition, GBP/JPY pair was also on positive territory, up 0.20% to trade at 157.93 at 6:53 GMT. Hometrack reported that its index of home prices rose 3.1% in October on annual basis, after another 2.4% advance a month ago. The monthly climb in October was the same as in September, 0.5%.

The Japanese yen has dropped 20% during the past year, or the worst performing currency among the 10 developed-nation currencies, which are tracked by Bloomberg Correlation-Weighted Indexes. The US dollar has climbed 0.5%, while the euro has demonstrated the best performance, rising 8% during the same period.

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