USD/JPY preserved gains before US new home sales

US dollar maintained its gains against the Japanese yen on Friday, following the positive set of US data released yesterday and in anticipation of the crucial new home sales report.

USD/JPY reached its highest point today at 99.12 at 6:19 GMT, after which the pair consolidated at 98.90. Support was anticipated at August 20th low, 96.92, while resistance was to be encountered at August 5th high, 99.15.

The dollar received a boost against most of its peers on Thursday after Markit Economics reported that the advance value of US manufacturing PMI climbed to 53.9 in August, reaching a five-month high, from a value of 53.7 in July. Preliminary estimates pointed that the indicator will increase to 54.0. In addition, the Department of Labor reported that initial jobless claims rose by 13 000 to 336 000 during the week ending on August 17th 2013, as experts had anticipated a lesser increase in the number of claims, to 330 000.

A separate report by the Conference Board showed that the index of leading economic indicators in the United States rose by 0.6% during the month of July after remaining flat in June. Eight of the ten indicators, which comprise the index, demonstrated higher values in July, including employment, improved equity markets, loan growth and building permits.

Additionally, later in the trading day the United States was to release data on new home sales.

In the mean time, earlier today a speculation appeared that Japanese importers will purchase US dollars to hedge their exposure to the weak national currency. Japanese investors may abandon Japanese government bonds in favor of higher-yielding US equivalents, as such a scenario could lay pressure on the Japanese yen.

Elsewhere, the yen was losing ground against the euro, as EUR/JPY cross added 0.19% to trade at 132.11 at 8:08 GMT, after touching 132.34 earlier today, the highest point since July 25th. Speculation appeared that Bank of Japan Governor Haruhiko Kuroda will reiterate the case for unprecedented monetary easing at the Federal Reserve’s annual conference in Jackson Hole.

“BOJ officials have really got to maintain what they’ve done,” said Derek Mumford, a director at Rochford Capital, a currency risk-management company in Sydney, cited by Bloomberg. “They’ve also got to look to pressure the government as much as they possibly can to fulfill their side of the bargain with structural reform. There’s potential for the yen to weaken in the very near term”.

GBP/JPY pair was also gaining on a daily basis, up by 0.27% to trade at 154.34 at 8:12 GMT.