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Forex News: Yen Extends Decline

Yen Extends Decline

07/07/2017 - 07:07:00 (RTTNews)

(RTTNews) - The Japanese yen continued to be lower against its key counterparts in the European session on Friday, after the Bank of Japan announced purchases of unlimited amount of government bonds to curb a rise in yields under the so called "Yield Curve Control" framework.

The central bank announced that it would buy unlimited amount of JGB with maturities of 5 to 10 years and increased the amount of purchases of five to 10-year JGBs to 500 billion yen from the previous 450 billion yen at a regular auction.

The BoJ announcement came after the country's benchmark 10-year government bond yield rose to 0.105 percent early in the day, far higher than the central bank's target of zero percent.

Investors await the all-important U.S. jobs report due out later in the day for clues on the health of the world's largest economy. The nonfarm payrolls are forecast to grow by 179,000 jobs in June, and the unemployment rate is expected to hold at 4.3 percent.

Preliminary data from the Cabinet Office showed that Japan's leading index strengthened in May, while coincident index fell from April.

The leading index that measures the future economic activity, rose to 104.7 in May from 104.2 in April. The score was forecast to rise to 104.6.

The currency has been trading in a negative territory in the Asian session

The yen hovered near a 2-month low of 113.84 against the greenback, from a high of 113.11 hit at 7:30 pm ET. If the yen extends slide, 115.00 is likely seen as its next support level.

The yen slid to a 1-1/-year low of 130.01 against the euro, after having advanced to 129.17 at 6:15 pm ET. On the downside, 132.00 is possibly seen as the next support level for the yen.

Data from Destatis showed that German industrial production grew at the fastest pace in four months in May.

Industrial production grew 1.2 percent month-on-month in May, faster than the 0.4 percent increase seen in April and exceeded economists' forecast of 0.2 percent.

The yen hit a 1-1/-year low of 118.42 against the Swiss franc in the Asian session and moved sideways in the subsequent part of the day's trading. The pair finished Thursday's deals at 117.84.

Data from the State Secretariat for Economic Affairs showed that Switzerland's unemployment rate remained stable in June.

The jobless rate held steady at seasonally adjusted 3.2 percent in June, in line with expectations.

The yen slid to a 2-day low of 86.43 against the aussie, off its early session's high of 85.73. Against the kiwi, the yen hit more than a 5-month low of 82.90 in the Asian session and held steady thereafter. Next likely support levels for the yen are seen around 88.00 against the aussie and 84.00 against the kiwi.

The yen edged down to 87.68 against the loonie, after having advanced to 87.13 at 5:00 pm ET. Further weakness may take the yen to a support around the 90.00 region.

On the flip side, the yen advanced to 146.46 against the pound, from an early nearly 2-month low of 147.61. The yen is likely to locate resistance around the 143.00 level.

Data from the Office for National Statistics showed that UK industrial production fell unexpectedly in May.

Industrial output fell 0.1 percent month-on-month in May, confounding expectations for an increase of 0.4 percent and reversed a 0.2 percent rise registered in April.

Looking ahead, U.S. and Canada jobs data as well as Ivey PMI - all for June will be out in the New York session.

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