Forex - USD/JPY weekly outlook: July 28 - August 1

Investing.com - The dollar was at almost three week highs against the yen late Friday as upbeat U.S. data and strong gains against the euro bolstered the greenback across the board.

USD/JPY edged up 0.02% to 101.82 late Friday, and ended the week 0.47% higher.

The pair was likely to find support at 101.40, Thursday’s low and resistance at around the 102.00 level.

The greenback was boosted as better than expected data on durable goods orders for June added to signs that the U.S. economy is improving.

The Commerce Department reported a rise of 0.7% in orders of long lasting goods such as machinery and electronic products, compared to forecasts of 0.5%.

Demand for the dollar has been underpinned since Federal Reserve Chair Janet Yellen indicated earlier this month that U.S. interest rates could rise sooner if the recovery in the labor market continues.

The dollar rose to eight month highs against the broadly weaker euro on Friday as weaker than expected German economic data underlined concerns over the diverging monetary policy path between the European Central Bank and other central banks.

Meanwhile, EUR/JPY was down 0.23% to 136.75 late Friday, not far from the five month lows of 136.35 reached in the previous session.

The drop in the euro came after a report showed that Germany’s Ifo business climate index fell to 108.0 in July, missing estimates for a reading of 109.4. It was the third consecutive monthly decline.

The data added concerns over the outlook for the euro zone’s largest economy. The euro has come under pressure since the ECB cut rates to record lows on June 5, in a bid to stave off the risk of deflation and shore up growth in the region.

Sentiment on the single currency was also hit by concerns that tougher sanctions on Russia would have a negative impact on the outlook for growth in the currency bloc, which has close trade ties with Moscow.

In the week ahead, investors will be focusing on Friday’s nonfarm payrolls report, while Wednesday’s Fed statement will also be closely watched for any indications that the central bank is moving closer to raising rates. Wednesday’s revised reading on U.S. second quarter growth will also be in focus.

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

Monday, July 28

The U.S. is to release data on pending home sales.

Tuesday, July 29

Japan is to publish data on household spending and retail sales.

Later Tuesday, the U.S. is to publish reports on house price inflation and consumer confidence.

Wednesday, July 30

Japan is to publish a preliminary report on industrial production.

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The U.S. is to release the ADP report on private sector job creation, which leads the government’s nonfarm payrolls report by two days. The U.S. is also to publish revised data on second quarter growth.

Later Wednesday, the Federal Reserve is to announce its federal funds rate and publish its rate statement.

Thursday, July 31

Japan is to release data on average cash earnings.

The U.S. is to release the weekly report on initial jobless claims, as well as data on manufacturing activity in the Chicago area.

Friday, August 1

Bank of Japan Governor Haruhiko Kuroda is to speak at an event in Tokyo; his comments will be closely watched.

The U.S. is to round up the week with data on nonfarm payrolls and the unemployment rate, while the Institute of Supply Management is to release data on manufacturing activity.