Forex - USD/JPY weekly outlook: June 17 - 21

Investing.com - The dollar ended the week sharply lower against the yen on Friday as weaker-than-expected U.S. data and uncertainty over the future of central bank stimulus bolstered safe haven demand for the yen.

The dollar was lower against the yen for the fourth consecutive session on Friday, with USD/JPY dropping 1.26% to settle at 94.17, and ended the week 3.8% lower, the largest weekly decline since July 2009.

The pair is likely to find support at 92.72, the low of April 4 and resistance at 96.09, Thursday’s high.

The yen rose to multi-month highs against the dollar and the euro earlier the week, following steep falls in Japanese equities after the Bank of Japan disappointed market expectations for measures to ease market volatility.

The BoJ’s lack of action, along with growing expectations that the Federal Reserve will begin to taper its USD85 billion-a-month bond purchasing program, sparked a broad sell-off in risk assets.

EUR/JPY was down 1.50% to 125.66 at the close on Friday, ending the week 2.73% lower, the worst weekly performance since July 2012.

The dollar fell to fresh session lows against the yen on Friday after data showed that the University of Michigan consumer sentiment index fell unexpectedly in June after rising to the highest level in almost six years in May.

Separate reports showed that U.S. industrial production was flat in May, while the capacity utilization rate fell unexpectedly last month.

In the coming week, markets will be focusing on Wednesday’s Federal Reserve policy meeting, as investors look to Fed Chairman Ben Bernanke for any indication on when the U.S. central bank may start to unwind its easing policies.

A speech by BoJ Governor Haruhiko Kuroda on Friday will also be closely watched.

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

Monday, June 17

Japan is to release official data on tertiary industry activity, an important indicator of economic health. Australia is to produce a report on new motor vehicle sales, a leading indicator of consumer confidence.

The U.S. is to publish the Empire state manufacturing index.

Also Monday, finance ministers and central bankers from the G8 group are to hold the first day of a two day summit in Northern Ireland.

Tuesday, June 18

The U.S. is to release official data on building permits, housing starts and consumer price inflation.

Meanwhile, finance ministers and central bankers from the G8 group are to hold the second day of a two day summit in Northern Ireland.

Wednesday, June 19

Japan is to release official data on the trade balance, the difference in value between imports and exports.

Later Wednesday, the Federal Reserve is to announce its federal funds rate and publish its rate statement. The statement is to be followed by a closely watched press conference with Chairman Ben Bernanke. The U.S. central bank is also to release its quarterly report on economic and inflation projections.

Thursday, June 20

The U.S. is to release the weekly government report on initial jobless claims, in addition to data on existing home sales and the Philly Fed manufacturing index.

Friday, June 21

BoJ Governor Haruhiko Kuroda is to speak; his comments will be closely watched for indications of the future direction of monetary policy.