© Dukascopy Bank SA
The Dollar/Yen pair started trading on Monday at the 121.57 level, but was not able to sustain bullish momentum from previous weeks and dropped to reach 118.84 on December 12, following worse-than-expected Japanese economic data. Consumer confidence index in the world's third biggest economy decreased to 37.7 points in November from 38.9 a month before, while machinery orders dropped as much as 6.4% in October. Tertiary industry activity, in turn, diminished 0.2%. Moreover, Japan's economy contracted more than estimated in the third quarter, shrinking 1.9%. Back to currency pair's development, the US Dollar edged higher against the Yen on Friday, after data showed the US consumer spending soared in November. Core retail sales, which exclude automobiles, gasoline, building materials and food services, rose 0.6% last month, underlining the view that economic recovery is continuing to gain momentum in the largest global economy.
This week's overall sentiment for the USD/JPY pair changed back to distribution seen two weeks before, as 55.6% of all traders are now supporting the bullish case for the US Dollar. Slightly more than 34% of traders expect the pair to close above the 118.4 level towards the end of present working week. This Monday, Tankan manufacturing outlook slipped to 12 points. Despite that, the non-manufacturing gauge went up to 16 points. Concerning other fundamentals from Japan, trade balance for November is going to be announced in the night between Tuesday and Wednesday. Still, the most important event for Japan is considered to be the Bank of Japan's statement on monetary policy on Friday. From the US side, traders could pay attention to the Fed's interest rate decision on Wednesday and services PMI, which is due to be released the next day.
© Dukascopy Bank SA