Yen Targets Euro Support

The yen will look to make further challenges on the key 160.0 Euro support area in the short term

The Australian and New Zealand dollars were unable to sustain gains on Thursday and this also tended to support the Japanese currency. There was, however, further evidence of a flow of capital into high-yield overseas bond funds which will certainly trigger yen selling on any significant rallies. The dollar settled slightly stronger at near 109.50 in US trading.

The Japanese economic data was stronger than expected with a 0.9% increase in industrial production for July while the dip in household spending was lower than expected. The unemployment rate also fell to 4.0% from 4.1% previously while core consumer inflation rose to 2.4% from 1.9% previously.

There is unlikely to be a near-term impact on monetary policy, but the signs of economic resilience will provide some limited yen support. The yen edged stronger towards 109.0 against the dollar following the data with some headway against the Euro. Position adjustment later on Friday could trigger erratic trading and the yen strengthened to 108.50 in Europe with a further challenge on Euro support close to 160.0.

Investica
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