Investing.com- The U.S. dollar weakened against the Japanese yen during Thursday’s Asian session. Economic data out of Japan indicated that the Japanese economy may be weaker than expected, while in the U.S., the Federal Reserve maintained its monetary stimulus programs.
The USD/JPY shed 0.20% to 90.91, down from a high of 91.16 and up from a low of 90.80. The pair was likely to find support at 88.29, the low from January 22, and resistance at 91.35, Wednesday’s high.
Despite the fact that the yen was stronger against the dollar Thursday, the yen has been steadily depreciating against the greenback since mid-December. Then candidate for Prime Minister, Shinzo Abe laid out his plan to drive down the value of the yen in an attempt to jumpstart the Japanese economy.
The high hit on Wednesday in the pair represents a level that had not been seen since the spring of 2010.
Earlier on Thursday, Japan’s industrial production came in at 2.5% on a month-over-month basis. Economists had forecast a gain of 4.5%, so the number was somewhat of a disappointment. Also, Japan’s manufacturing PMI reported at 47.7 -- higher than the previous reading of 45, but still lower than 50. A PMI reading below 50 suggests economic contraction.
In the U.S., the Federal Reserve’s Open Market Committee (FOMC) released its rate decision. The FOMC opted to leave interest rates near 0% while continuing to purchase about $85 billion per month in securities.
Continued monetary easing from the Federal Reserve might be seen as dollar negative, as it could stoke the possibility of inflation.
At the same time, U.S. GDP contracted on a quarterly basis, suprising economists who had been looking for a modest expansion. GDP came in at -0.1%, less than the positive 1.1% gain anticipated.
Japan’s economy remains dependent on exports, particularly electronics. Earlier on Wednesday, electronics giant Nintendo raised its earnings outlook while at the same time lowering sales expectations.
A weaker yen helps to support Japan’s exports by making their products cheaper to foreign purchasers.
Investing . Com
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