Forex - USD/JPY weekly outlook: July 11 - 15

Investing.com – Last week saw the U.S. dollar end lower against the yen, after Friday’s disappointing U.S. non-farm payrolls report sparked fears that the U.S. economic recovery is losing momentum.

USD/JPY hit 81.62 on Friday, the pair’s highest since May 31; the pair subsequently consolidated at 80.57 by close of trade on Friday, shedding 0.29% over the week.

The pair is likely to find support at 80.00, the low of June 22 and resistance at 81.41, Thursday’s high.

The Department of Labor said U.S. nonfarm payrolls rose by just 18,000 in June, far below the 89,000 increase forecast by economists, with employers hiring the fewest workers in nine months, while the unemployment rate rose to 9.2%, the highest level this year.

Risk appetite was also hit by fresh concerns over sovereign debt contagion in the euro zone, after shares in Italian bank UniCredit SpA were suspended, a move which saw the cost of insuring Italian debt against default rise sharply.

Meanwhile, the cost of insuring Portuguese, Irish and Greek government debt against default surged to record highs.

Earlier in the week, ratings agency Moody's downgraded Portugal's credit rating to junk status, saying there is growing risk the country will need a second round of official financing before it can return to capital markets.

In the week ahead, the Bank of Japan is to announce its benchmark interest rate. Meanwhile, investors will be looking towards U.S. data on retail sales and consumer prices to gauge the strength of the economic recovery.

Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.

Monday, July 11

Japan is to release government data on M2 money stock, household confidence and preliminary data on machine tool orders.

Tuesday, July 12

The BoJ is to announce its benchmark interest rate; the announcement will be followed by a closely watched press conference. Meanwhile, Japan is to release government data on tertiary industry activity, a leading indicator of economic health.

The U.S. is to publish official data on the trade balance, the difference in value between imported and exported goods and services over the month.

In addition, the Federal Reserve is to publish the minutes of the June policy-setting meeting. The minutes give investors a detailed insight into the economic and financial conditions that influenced the interest rate decision.

Wednesday, July 13

Japan is to publish revised data on industrial production, while the BoJ is to release its monthly report, which outlines the economic data policymakers looked at when making the interest rate decision.

Later in the day, the U.S. is to publish official data on import prices and crude oil inventories, as well as a report on the federal budget balance. In addition, Federal Reserve Chairman Ben Bernanke is to give testimony on monetary policy before lawmakers in Washington.

Thursday, July 14

The U.S. is to release a string of economic data, beginning with a report on retail sales, the primary gauge of consumer spending, which accounts for the majority of overall economic activity.

The country is also to release official data on producer price inflation, a leading indicator of consumer inflation, as well as weekly government data on initial jobless claims. Also Thursday, Fed Chair Ben Bernanke is to deliver the second part of his testimony on monetary policy in Washington.

Friday, July 15

The BoJ is to publish the minutes of its most recent policy setting minutes. The minutes give investors a detailed insight into the economic and financial conditions that influenced the interest rate decision.

The U.S. is to round up the week with a flurry of economic data, with reports on consumer price inflation, which accounts for a majority of overall inflation. In addition, the U.S. is to publish a report on manufacturing activity in New York state, as well as government data on industrial production and the capacity utilization rate. Meanwhile, the University of Michigan is to publish preliminary data on consumer sentiment and inflation expectations.