USD/JPY reaches six-month highs, supported by upbeat consumer sentiment

US dollar advanced to highs unseen in six months against the Japanese yen on Thursday, as Thomson Reuters in cooperation with the University of Michigan reported yesterday that their index, gauging consumer sentiment in the United States, surpassed expectations in November.

Having touched a six-month high at 102.28 during the early phase of Asian trade, USD/JPY was trading little changed at 102.15 at 7:36 GMT, dipping a mere 0.01% for the day. Support was likely to be received at November 27th low, 101.25, while resistance was to be encountered at May 29th high, 102.53.

According to a report by Thomson Reuters and the University of Michigan on Wednesday, the final reading of the gauge of consumer sentiment in the United States climbed to 75.1 in November from a final value of 73.2 in October. Expectations pointed an increase to 73.1 in November compared to the preliminary reading of 72.0, published on November 8th, which was also the lowest point since December 2011.

Additionally, also yesterday the Department of Labor reported that the number of people, who filed for unemployment assistance in the United States, decreased for a sixth consecutive week in the past seven weeks, implying that labor market in the country continued to demonstrate resiliency. The number of initial jobless claims, an indicator for lay-offs in companies, dropped by 10 000 to reach 316 000 during the week ending on November 23rd 2013, confounding preliminary estimates pointing that claims will climb to 330 000. The number of claims in the preceding week has been revised up to 326 000 from 323 000 previously.

“A string of reasonably positive data in the U.S. is probably going to help the dollar via higher treasury yields,” said Michael Turner, a debt and currency strategist at Royal Bank of Canada in Sydney, cited by Bloomberg News. Yields on Japanese government bonds “have been falling fairly consistently for the past four or five months and that’s kept the yen fairly weak.”

The yield on benchmark US 10-year bonds gained three basis points, or 0.03 percentage point, to reach 2.74% on Wednesday, while the yield on Japanese 10-year government bonds was 0.60% today.

The Institute for Supply Management (ISM) will probably say that its index of manufacturing activity fell to a value of 55 in November from 56.4 in the preceding month, which was the highest level since April 2011, according to the median estimate of economists participated in a survey by the same media. The official report is scheduled for release on December 2nd.

Today trading volumes are expected to remain thin, as markets in the United States are closed for Thanksgiving holiday.

Meanwhile, in Japan, earlier on Thursday it became clear, that annualized retail sales rose 2.3% in October, marking a third consecutive year-to-year increase, above preliminary estimates of a 2.2% gain. Septembers rate of increase has been revised down to 3.0% from 3.1% previously. On a monthly basis, however, retail sales dropped 1.0% in October, following a 1.7% gain in September.

Yesterday the yen came under selling pressure after comments made by Bank of Japan board member Sayuri Shirai, who said that the central bank may consider additional measures in order to loosen its monetary policy in case of necessity. She also raised doubts over whether banks inflation objective can be reached due to downside risks to economic growth.

Elsewhere, the yen was losing ground against the euro, with EUR/JPY cross advancing 0.26% on a daily basis to trade at 139.11 at 8:11 GMT, also the pairs highest point since June 5th 2009. GBP/JPY pair was gaining 0.38% to trade at 167.06 at 8:12 GMT.