* Yen generally offered ahead of Japanese elections
* USD supported by solid data; Moody's drops downgrade
By Wayne Cole
SYDNEY, July 19 The U.S. dollar was again
probing major resistance against the yen on Friday, encouraged
by solid economic data, higher Treasury yields and an
unthreatening conclusion to testimony from Federal Reserve chief
A broadly firmer dollar was up at 100.55 yen, having
bounced 0.8 percent on Thursday, to clear a chart hurdle at
"The 100.75 area is the key initial pivot as breaks should
set the stage for another run at last week's high (at 101.53),"
said analysts at JPMorgan.
"The yen underperformance led to a bullish shift for the
crosses implying additional upside can develop as well."
The euro broke above the key 131.30/75 area to reach a
seven-week peak at 131.89 yen, with the next stop
being resistance in the 132.60/132.86 zone. The pound was also
testing an important barrier at 153.00 yen as was the
Canadian dollar at 97.40.
The dollar was otherwise sidelined on the euro at $1.3106
and a shade firmer against a basket of major currencies
The drop in the yen could help Japanese shares
higher on Friday, offsetting disappointing results from
Microsoft and Google. The yen is inversely
correlated with Tokyo stocks and gains in one tend to fuel
losses in the other.
Investors are also focusing on Japan's upper house elections
on Sunday with opinion polls pointing to a big win for Prime
Minister Shinzo Abe's LDP.
Analysts hope that winning a clear majority will embolden
Abe to push ahead with structural reforms to revive the economy,
though there is also a fear that a clean sweep could actually
lessen pressure for tough action.
"Under a landslide LDP victory, we would expect USDJPY to
rally, though we would be looking to take profits at 103," wrote
analysts at Barclays in a note.
However, with expectations so high, anything less than a
sweeping victory could see the yen bounce come Monday, they
Supporting the dollar was news Moody's had changed the U.S.
sovereign outlook to stable from negative and affirmed its
triple-A rating, removing the threat of a downgrade.
Data on jobless claims and the Philly Fed manufacturing
survey was also upbeat, enough to lift 10-year
Treasury yields around 4 basis points to 2.53 percent.
Finishing his likely last appearance before Congress, Fed
Chairman Bernanke said the run of economic news had been mixed
and it was too early to say when it might start tapering its
There is little in the way of major economic data out of
Asia, or the U.S., on Friday, while finance ministers and
central bank heads of the Group of 20 meet in Moscow.