US dollar managed to climb and preserve gains against the Japanese yen on trading Tuesday, following the release of a report on Japanese machine orders earlier today.
USD/JPY reached its highest point during the day at 97.55 at 5:22 GMT, after which consolidation followed at 97.40. Support for the pair was expected at June 19th low, 94.82, while resistance was to be encountered at August 7th high, 97.80.
Earlier on Tuesday the Economic and Social Research Institute reported that Japanese machine orders, a key indicator of capital asset expenditures in the country, registered a 2.7% decline during June on a monthly basis, after the 10.5% increase a month ago. Experts had projected a larger drop in June, 7.0%. On the other hand, machine orders rose by an annual rate of 4.9% in June, significantly slowing down in comparison with May, when orders jumped by 16.5%. Forecasts pointed that orders will drop by 5.7% during the three months, ending in September, compared to the preceding three months.
In addition, on Monday it became clear that Japanese economy slowed down its growth during the second quarter, missing preliminary estimates. The preliminary value of Japan’s Gross Domestic Product rose by an annual rate of 2.6% during the second quarter of the year, after the 3.8% expansion in the first quarter. Experts’ median estimate pointed a rise by 3.6%. During the second quarter of 2013 economy expanded by 0.6% in comparison with the first quarter, again below the expected 0.9% increase.
Meanwhile, the greenback touched its highest level against the yen in a week today, ahead of the retail sales report, due to be released out of the United States later in the day. The Department of Commerce will probably announce that sales rose by 0.3% in July, according to median estimate by experts, after the 0.4% climb in June.
“The dollar will be bought if we get strong numbers on retail sales,” said Koji Iwata, a vice president of foreign-exchange trading at Mizuho Bank Ltd. in New York, cited by Bloomberg. “The market’s view on Fed tapering in September has not changed.”
Elsewhere, the Japanese currency was trading lower against the euro, as EUR/JPY cross advanced 0.61% to 129.69 at 6:59 GMT. GBP/JPY pair was also gaining today, up by 0.64% to trade at 150.82 at 7:00 GMT. The yen has decreased by 8.5% during this year, the worst performing currency following the Australian dollar among 10 developed-nation currencies, tracked by Bloomberg Correlation-Weighted Indexes. The euro has increased its value by 5.2%, taking the place of the largest gainer within the group, while the US dollar has advanced 4.2%.
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