USD/JPY rose after Japanese data, potential US budget agreement

US dollar traded higher against the Japanese yen on Friday, following the release of a set of economic data out of Japan, while US lawmakers continued negotiations to avoid a default, which reduced safe haven demand for the yen.

USD/JPY rose to a session high at 98.56 at 3:20 GMT, after which consolidation followed at 98.42, gaining 0.26% for the day. Support was likely to be found at October 7th low, 96.57, while resistance was to be encountered at October 1st high, 98.72.

According to data by Bank of Japan, the index, gauging prices of corporate goods in the country ticked up 0.3% in September on a monthly basis, as in August it rose 0.2%. In annual terms, the index advanced 2.3% in September, meeting expectations, and confirming the rate of increase in August.

Meanwhile, the greenback climbed against the Japanese currency as debt ceiling negotiations continued. US President Barack Obama and House Republican leaders held a meeting for 90 minutes at the White House on Thursday, after House Speaker John Boehner said that he would offer a measure to postpone a potential US default from October 17th to November 22nd. The president did not accept or reject Republicans’ proposal for a short-term increase in the debt ceiling, Bloomberg reported. The two sides were planning further debates among their staff members yesterday in order to address the president’s insistence that Republican leaders agree to fund the government before more profound fiscal talks are to be initiated.

“An agreement on the debt ceiling is seen as a risk-on catalyst, while the opposite is risk off — it’s as simple as that,” said Daisaku Ueno, the chief currency strategist at Mitsubishi UFJ Morgan Stanley Securities Co. in Tokyo, cited by the same media. “It’s convenient to use dollar-yen to take part in this kind of swing trade.”

Elsewhere, the Japanese currency was lower against the euro, with EUR/JPY cross advancing 0.38% on a daily basis to trade at 133.23 at 7:00 GMT. GBP/JPY pair was gaining 0.34% to trade at 157.31 at 7:02 GMT. The US dollar has gained 0.5% this week, or the best performance after the Aussie dollar among 10 developed-nation currencies, tracked by Bloomberg Correlation Weighted Indexes. Australian dollar appreciated 0.9%, while the yen lost 0.5% of its value.