Forex - USD/JPY gains as S&P upgrades U.S. outlook

Investing.com - The dollar rose against the yen on Monday after the Standard & Poor's ratings agency upgraded its outlook for the U.S.

In U.S. trading on Monday, USD/JPY was trading at 98.76, up 1.26%, up from a session low of 97.71 and off a high of 99.29.

The pair was likely to find resistance at 99.29, the earlier high, and support at 95.00, Friday's low.

Standard & Poor’s earlier revised its long-term outlook on the U.S. credit rating to stable from negative.

The agency affirmed the country's AA+/A-1+ rating.

"The stable outlook indicates our appraisal that some of the downside risks to our ‘AA+’ rating on the U.S. have receded to the point that the likelihood that we will lower the rating within the next two years is less than one in three," Standard and Poor's said.

"We do not see material risks to our favorable view of the flexibility and efficacy of U.S. monetary policy. We believe the U.S. economic performance will match or exceed its peers’ in the coming years. We forecast that the external position of the U.S. on a flow basis will not deteriorate."

The news boosted expectations for the Federal Reserve to begin scaling back stimulus measures soon now that the economy appears to be improving.

Stimulus measures, such as the Fed's USD85 billion monthly bond-buying program, weaken the dollar to spur recovery.

The dollar continued to see support from Friday's jobs data.

The Bureau of Labor Statistics said the U.S. economy added 175,000 jobs in May, beating expectations for an increase of 170,000, after 149,000 jobs were created the previous month.

The headline U.S. unemployment rate ticked up to 7.6% last month, from 7.5% in April as more individuals entered the labor market and began fresh job searches.

The yen traded lower as investors looked ahead to the outcome of the Bank of Japan’s policy meeting on Tuesday after the bank left policy on hold last month.

Revised data on Monday showed that the Japanese economy expanded by 1.0% in the first quarter, up from a preliminary estimate of 0.9%.

A separate report showed that the country posted a wider-than-predicted current account surplus in April, as a weaker yen boosted the value of income stemming from overseas investments.

The yen, meanwhile, was down against the pound and down against the euro, with GBP/JPY up 1.43% and trading at 153.83 and EUR/JPY trading up 1.51% at 130.91.